FASB HOLDS HEARINGS
ON PROPOSALS FOR DERIVATIVE ACCOUNTING AND COMPREHENSIVE INCOMEAccounting principle standard setting is not getting any easier, in spite of the reorganization of the FASB's oversight foundation. The recent hearings by the FASB on its latest proposals for improved accounting for derivatives and comprehensive income demonstrate resistance at multiple levels.

Objections to the accounting for derivatives seem to focus primarily on the fact that, for certain hedging transactions, the proposed accounting does not permit an adjustment to basis of the related asset, as is now generally done in practice. Instead, the offset to carrying the derivative at fair value would be to a stockholders' equity account and be included in comprehensive income, as proposed.

Objections on comprehensive income are at a higher level, with many just opposed with the idea of introducing yet another measure of operations. Also strongly opposed is the proposal for comprehensive income per share.

The general feeling, however, is that the opposition is not of the same nature as that voiced against the accounting for stock-based compensation. That opposition was political in nature; the present objections seem to focus more on the accounting issues. *