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Highlights from the FASB’s June 11 meeting

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Jun 13, 2014

At its June 11, 2014, meeting, the FASB discussed its projects on (1) the disclosure framework, (2) the classification and measurement of financial instruments, and (3) impairment.


Disclosure framework — defined benefit plans

The FASB discussed potentially changing employers’ disclosures about defined benefit plans on the basis of the guidance in the proposed FASB Concepts Statement, Conceptual Framework for Financial Reporting, Chapter 8: Notes to Financial Statements. No technical decisions were made at this session.


Classification and measurement of financial instruments

The FASB continued redeliberating its proposed Accounting Standards Update Recognition and Measurement of Financial Assets and Financial Liabilities, and tentatively decided to retain:

  • The presentation requirements for financial instruments in the statement of comprehensive income.
  • The disclosure requirements for (1) sales or transfers of securities classified as held to maturity and (2) securities classified as available for sale.

In addition, entities would disclose:

  • The “level of the fair value hierarchy within which the fair value measurements are categorized in their entirety (Level 1, 2, or 3) for financial instruments measured at amortized cost.”
  • The “fair value of financial assets measured at amortized cost to be disaggregated into major categories of those assets.”
  • The “carrying amount of equity investments without readily determinable fair values, as well as the amount of observable and unobservable adjustments made to the carrying amount during the reporting period.”

For more information, see the meeting minutes on the FASB’s Web site.


Impairment

The FASB continued redeliberating its proposed Accounting Standards Update, Financial Instruments — Credit Losses (Subtopic 825-15), and tentatively decided that:

  • For loans that are transferred into the held-for-sale classification, entities should “retain the amortized cost basis (excluding the allowance for expected credit losses) as the loan’s cost basis and recognize a valuation allowance equal to the amount by which the amortized cost basis exceeds fair value.”
  • Entities should adjust their impairment allowance for a debt security identified for sale, making the allowance “equal to the difference between the debt security’s fair value and its amortized cost basis.”
  • Entities should “measure and recognize an allowance for expected credit losses on purchased or retained beneficial interests for which there is a significant difference between contractual and expected cash flows consistent with how an entity should recognize and measure the allowance for purchased credit-impaired assets. In addition, changes in expected cash flows due to factors other than credit should be accreted into interest income over the life of the asset.”

For more information, see the related Deloitte Accounting Journal entry and the meeting minutes on the FASB’s Web site.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.