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Financial instruments — Overview

The FASB is currently (1) finalizing amendments to existing guidance on classification and measurement of financial instruments and (2) redeliberating its credit losses proposal.

In early 2013, in an effort to improve and increase convergence of the FASB’s and IASB’s respective accounting standards for financial instruments, the FASB issued a proposed Accounting Standards Update (ASU) to obtain feedback on the recognition, classification, measurement, and presentation of financial instruments. In subsequent redeliberations, the FASB decided to abandon work on a converged approach and to retain most of the existing U.S. GAAP requirements related to classification and measurement of financial instruments other than for equity investments.

Until June 2012, the FASB and the IASB jointly deliberated an impairment model known as the “three-bucket approach,” which was broadly similar to the new IFRS 9 impairment approach. In response to feedback from U.S. constituents on the joint model, however, the FASB decided to develop an alternative impairment model — the current expected credit loss (CECL) model — and issued a proposed ASU on that model in December 2012. Under the CECL model, an entity would recognize as an allowance its estimate of the contractual cash flows not expected to be collected. The FASB continues to make progress on redeliberating various aspects of the proposed CECL model and revising existing impairment guidance for certain financial assets.

In July 2014, the IASB issued amendments to IFRS 9 that introduce a new expected-loss impairment model to IFRSs and modify the standard’s existing classification and measurement guidance. For more information about IASB’s amendments to IFRS 9 see Deloitte’s August 8, 2014 Heads Up. The FASB also recently added a project to its agenda to consider improvements to the hedge accounting guidance under U.S. GAAP.

For more information, see our project pages on:

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.