FASB Approves Credit Loss Standard
After reviewing the costs and benefits of its new guidance for writing down bad loans and securities , the Financial Accounting Standards Board (“FASB”) voted last week to proceed with a final standard based on the proposed Accounting Standards Update, Financial Instruments—Credit Losses (Subtopic 825-15). The standard will help companies with the financial reporting of credit losses on loans and other financial instruments, and is expected to be released in June. Relative to its decision, the FASB has deferred the new standard’s effective date by one year for public companies that fall under the Securities and Exchange Commission filer requirements. Such public companies must apply the forthcoming guidance to fiscal years, and interim periods. Read More.
Credit Loss Standard Coming in June
According to Financial Accounting Standards Board (“FASB”) member Lawrence Smith, the standard setter is on track to publish Accounting Standards Update No. 2012-260, Financial Instruments — Credit Losses (Subtopic 825-15). Despite numerous delays, Smith said that the updated guidance for writing down bad loans and securities is scheduled to be issued by June 30th. The FASB also plans to meet again later this month to consider the standard’s costs and benefits, as well as revisit the previously agreed upon 2019 effective date for public entities.
FASB Discusses Impairment of Financial Assets Project
During the Financial Accounting Standards Board’s (“FASB”) December 21st meeting, the board continued redeliberations on its proposed Accounting Standards Update, Financial Instruments—Credit Losses (Subtopic 825-15). In particular, the FASB discussed the following issues: Accounting for Purchased Financial Assets with Credit Deterioration (PCD Assets). The FASB determined that when the credit losses allowance is estimated without a method that discounts future anticipated cash flows, the allowance should be based on the average of the PCD asset. When the credit losses allowance is estimated with a method that discounts future anticipated cash flows, entities should use the discount rate that associates the. Read More.