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The FASB Makes More Decisions on Disclosures About Credit Quality and the Allowance for Credit Losses

Published on: 28 Apr 2010

Today, the FASB redeliberated three remaining issues related to the proposed standard Disclosures About the Credit Quality of Financing Receivables and the Allowance for Credit Losses, which the Board expects to issue as a final standard in May 2010. (Note that conclusions of the FASB are subject to change at future meetings and generally do not affect current accounting requirements until an official position (i.e., an ASU) is issued. Official positions are determined only after extensive deliberation and due process, including a formal vote.)

The Board decided the following:

  • Modifications — The Board agreed to require certain quantitative and qualitative disclosures only for the modifications of the financing receivables that constitute troubled debt restructuring (TDR). The staff will consider disclosures about other modifications (that are not TDR) that may be useful to users of financial statements.
  • Scope — The Board agreed to include leveraged leases in the scope of the final ASU and to require disclosure of credit quality of leveraged leases without the disclosure of the allowance for credit losses.
  • Effective Date for Nonpublic Companies — For nonpublic entities, the final ASU will be effective for annual reporting periods ending after December 15, 2011, with a prospective transition. The Board had previously decided that for public entities, the final ASU would be effective for interim and annual reporting periods ending after December 15, 2010.

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