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FASB Issues Amended Guidance for Amortized Premiums

The Financial Accounting Standards Board (“FASB”) has issued new guidance on the amortization of premiums for purchased callable debt securities. Released as Accounting Standards Update No. 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities , the standard reduces the amortization period for a premium to the earliest call date to improve when the interest income is recorded on bonds held either at a premium or a discount with the underlying instrument. ASU No. 2017-08 takes effect for public companies for the fiscal years, and interim periods within those years, starting after December 15, 2018. All other companies must apply the amendments to fiscal years starting after December 15, 2019, and interim periods. Read More.

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FASB Discusses Proposed Callable Debt Securities Standard

After reviewing feedback from its proposed Accounting Standards Update, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, the Financial Accounting Standards Board (“FASB”) has made tentative decisions on the following: Requests to Require a True “Yield-to-Worst” Amortization Method. Premiums on purchased callable debt securities will be amortized to the earliest call date. Requests to Clarify Consequential Amendments to Paragraph 946-320-35-20. The amendment to industry guidance was corrected to affirm that the FASB did not intend to change practice for investment companies holding debt securities. Requests to Clarify “Callable” and the Interaction with Paragraph 310-20-35-26.. Read More.

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