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Derecognition of Financial Instruments

Date recorded:

The IASB staff held an educational session for the FASB members related to the tentative decisions reached by the IASB in deliberating the issue. Several IASB members were present.

The FASB showed considerable interest in the model being developed by the IASB. The legal isolation principle was identified as the major difference between the current US guidance and the IASB proposals. In addition, the FASB seemed to support elimination of the collateral maintenance criterion in accounting for repurchase agreements.

Individual FASB members expressed some concerns about the applicability of the principle behind the IASB derecognition model in the United States and raised specific questions related to empty SPEs, collateralised loans, the pass through test, and interaction between the consolidation and derecognition guidance, especially in the context of SPEs and guarantees provided by the GSEs. This was an educational session only, no decisions were made. The Boards would discuss jointly the derecognition project at the April joint meeting.

This summary is based on notes taken by observers at the joint IASB-FASB meeting and should not be regarded as an official or final summary.

The IASB publishes summaries of the deliberations at Board meetings in its newsletter IASB Update. Past issues of IASB Update are available on IASB's Website. On Individual Project Pages on the IASB Website you will find links to observer notes and excerpts from IASB Update relating to that project.

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