At last Monday's SRI Conference, FASB's Ronald Lott, author of FIN 46, responded as follows to inquiries from Marty Rosenblatt, chair of the ASF's accounting committee. These were unofficial tentative answers representing Lott's personal views, and not necessarily those of the board:

* Appendix B should have probably indicated that guarantees of assets were variable interests in the entity only if they related to assets representing a majority of the fair value of the VIE's assets as provided in paragraph 12. *

* In performing the Appendix A calculations, it is appropriate to take into account the effects on projected cash flows of non-variable interests like at-the-money-interest rate swaps, guarantees of less than a majority of the assets and market-based service contracts.

* The disclosures need not be made for immaterial items.

* ALL fees paid to the decision maker are taken into account in paragraph 8.c. regardless of the nature of the service provided.

* If a guarantee applies to the majority of the assets, it is a variable interest in the entity even if it is a limited guarantee, for example, limited to only the first 10% of actual losses incurred.

* The board has not made any decisions on whether there will be a process for providing additional interpretive guidance on FIN 46, but they have decided that a DIG-like group will not be formed.

* Lott had no explanation and did not appear to realize that paragraph 8.d. only includes guarantor's fees in expected residual returns when they relate to substantially all of the assets and liabilities of the VIE, rather than a majority of the assets.

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