The document summarizes recent updates from the Financial Accounting Standards Board (FASB) including: 1) The FASB codification project which restructures accounting standards into a single online research system without changing GAAP. 2) Extensions of implementation dates for FIN 48 and other standards for non-public entities. 3) New standards on derivative instruments, convertible debt, intangible assets, collaborative arrangements, and other topics, many with enhanced disclosure requirements. Effective dates for these new standards generally begin after December 2008.

1. MFA – Moody, Famiglietti & Andronico, LLP Copyright 2008. Moody, Famiglietti & Andronico, LLP. All Rights Reserved. Travis Drouin, CPA, CIA Partner November 19, 2008 FASB Updates

2. FASB Codification Project Ongoing project designed to simplify, integrate, and topically organize authoritative U.S. accounting pronouncements issued by multiple standard setters (FASB, AICPA, EITF, SEC, etc.) into roughly 90 accounting topics, and to display all topics using a consistent structure. Doesn’t change GAAP. Introduces a new structure that is organized in an easily accessible, user-friendly online research system. Subject to a one-year verification and feedback period between January 15, 2008 and January 15, 2009, at http://asc.fasb.org/home .

3. FIN 48 – Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109 On February 1, 2008, FSP FIN 48-2 deferred the effective date of FIN 48 for certain nonpublic entities to annual financial statements for fiscal years beginning after December 15, 2007. At the October 15, 2008 FASB Board meeting, it was decided that FIN 48 will be deferred for all non-public entities until fiscal years beginning after December 15, 2008.

4. FIN 48 – Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109 (Cont.) Prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

5. FIN 48 – Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109 (Cont.) To evaluate a tax position: Recognition - Determine whether it is “more likely than not” that tax position will be sustained on examination based on technical merits of position. Measurement – Tax position recognized is largest amount of benefit that is greater than a 50% likelihood of being realized upon ultimate settlement.

6. FAS 161 – Disclosures about Derivative Instruments and Hedging Activities Effective for financial statements issued for fiscal years beginning after November 15, 2008. Requires enhanced disclosures regarding: Location and amounts of derivatives in financial statements. How derivatives and related hedged items are accounted for under FAS 133. How derivatives and related hedged items affect financial position, financial performance, and cash flows. Fair values of derivatives and their gains and losses in tabular format. Information about derivative features that are credit risk–related. Requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments.

7. FSP APB 14-1 – Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Inc. Partial Cash Settlement) Under APB 14, debt and conversion feature were considered inseparable, and no amount was attributed to conversion feature. FSP APB 14-1: Will be effective for financial statements for fiscal years beginning after December 15, 2008. Provides that liability and equity components should be accounted for separately. Accounting will reflect entity’s nonconvertible debt borrowing rate, when interest cost is recognized in subsequent periods. Will result in lower net income and EPS for holders. No impact on embedded conversion options under FAS 133.

8. FSP FAS 140-3 – Accounting for Transfers of Financial Assets and Repurchase Financing Transactions A transferor and transferee should not separately account for a transfer of a financial asset and a related repurchase financing unless : Both transactions have a valid and distinct business or economic purpose for being entered into separately, and Repurchase financing does not result in the initial transferor regaining control over the financial asset. Unless the initial transfer and repurchase financing meet specified criteria in paragraph 9 of this FSP, the transactions must be considered linked for purposes of applying FAS 140. Effective for financial statements issued for fiscal years beginning after November 15, 2008.

9. FSP FAS 142-3 – Determination of the Useful Life of Intangible Assets Resolves inconsistency between FAS 141 and 142. Useful life of ‘renewable’ intangible asset generally should reflect the same life assumed in valuing the asset, with some exceptions. Expanded disclosures required. Effective prospectively for new intangible assets acquired in fiscal years beginning after December 15, 2008 Disclosures apply to both old and new intangible assets in scope.

10. FSP SOP 90-7-1 – Amendment of AICPA Statement of Position 90-7 Addresses “fresh start” accounting. Effective for financial statements issued subsequent to date of this FSP (April 2008).

11. FSP EITF Issue No. 03-6-1 – Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities Addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and need to be included in the earnings allocation in computing EPS under the 2-class method described in FAS 128. Unvested share-based payment awards that contain non-forfeitable rights to dividends or equivalents are participating securities, and should be included in EPS computation. Effective for financial statements issued for fiscal years after December 15, 2008.

12. EITF Issue No. 07-1 – Accounting for Collaborative Arrangements Collaborative arrangement is a contractual arrangement that involves a joint operating activity. 2 (or more) parties who are both active participants in the activity and exposed to significant risks and rewards , dependent on commercial success of activity . Income statement classification of payments between participants depends on nature of arrangement. Effective for fiscal years beginning after December 15, 2008.

13. EITF Issue No. 07-5 - Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock Two-step approach: Evaluate contingent exercise provisions, if any. Provisions may not be based on an observable (external to entity) market or index. Evaluate settlement provisions. Indexed to own stock if settlement amount equals: Fair value of fixed number of entity’s shares Less Fixed amount of cash or another financial asset Effective for financial statements issued for fiscal years beginning after December 15, 2008.

14. EITF Issue No. 08-3 - Accounting by Lessees for Nonrefundable Maintenance Deposits Issue is whether lessees should account for maintenance deposits that may not be refunded (if the lessee does not perform the specified maintenance activities) as a deposit or as contingent rental expense. Maintenance deposits within scope should be accounted for as a deposit asset. Lessees should continue to evaluate whether it is probable that an amount on deposit will be returned to reimburse the costs of the maintenance activities incurred by the lessee. When amount on deposit is less than probable of being returned, it should be recognized as additional expense. Effective for financial statements issued for fiscal years beginning after December 15, 2008.

15. EITF Issue No. 08-4 The issues are: Whether embedded BCF’s in convertible securities should be valued separately at commitment date If answer to #1 is to value BCF’s separately, then how an embedded conversion feature should be recognized and measured How issuance of convertible securities with beneficial conversion ratios that adjust or arise based on occurrence of specified future events should be accounted for. Conforming changes to EITF 98-5 that resulted from EITF 00-27 and FAS 150 (re: above) will be effective for financial statements issued for fiscal years ending after December 15, 2008. Transition Guidance for Conforming Changes to EITF Issue No. 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios

16. Questions, Answers and Closing

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