Financial Reporting Alert 12-1, Accounting for eurozone sovereign debt holdings
Deloitte (United States) issued an alert regarding the impairment of Greek government bonds (GGBs) and debt issued by other eurozone states. The alert notes that under US GAAP and IFRSs, GGBs and other loans that are issued by the Greek state are impaired (other-than-temporarily impaired in the case of GGBs) as of 31 December 2011. The alert provides guidance on the measurement of the impairment loss for the different types of investment.
The alert also notes that, in general, loans to other eurozone member states are not considered impaired as of 31 December 2011, under both US GAAP and IFRSs. The alert stresses the importance of transparent disclosures, and notes the following:
Transparent disclosures are critical in helping investors understand the financial position and performance of entities that have material exposures to eurozone sovereign debt. An entity should consider providing relevant disclosures regarding both direct and indirect exposures (e.g., guarantees and other financial instruments).