February 16th, 2011

Insurance contracts. The IASB and the FASB invited guest speakers from PricewaterhouseCoopers and MetLife to provide an education session on separating insurance contracts into insurance and noninsurance components, which is referred to as unbundling. The IASB’s Exposure Draft, Insurance Contracts and the FASB’s Discussion Paper, Preliminary Views on Insurance Contracts, proposed that an insurer should account separately for the investment or service components of an insurance contract that are not closely related to the insurance coverage. The purpose of this education session was to give the Boards information on the effect, costs, and benefits of unbundling. Because this was an education session, the Boards were not asked to make any decisions.

Leases.

Lease term

The FASB and the IASB tentatively decided that the lease term should be defined, for both lessees and lessors, as follows:

The lease term is the non-cancellable period for which the lessee has contracted with the lessor to lease the underlying asset, together with any options to extend or terminate the lease when there is a significant economic incentive for an entity to exercise an option to extend the lease, or for an entity not to exercise an option to terminate the lease.

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