At its meeting yesterday, the FASB tentatively decided to:

• Reexpose for public comment its tentative model for the classification and measurement of financial instruments, as redeliberated by the Board.¹
• Defer a decision on the effective date of the new model until after the comment period to consider feedback received on the exposure draft (ED). The Board also decided to invite comments as to whether nonpublic entities should be required to apply the new model at the same time as public entities.
• Require entities to do the following as of the beginning of the first reporting period in which the guidance becomes effective:
• Record a cumulative-effect adjustment to beginning retained earnings for financial instruments outstanding as of the beginning of the first reporting period in which the guidance is effective.
• Provide certain transition disclosures as described in the meeting’s Summary of Board Decisions.
• Not allow entities to early adopt the tentative model, except for the separate presentation in other comprehensive income of changes in fair value related to the entity’s own credit risk for financial liabilities for which the fair value option (FVO) was elected. Specifically, as noted in the Summary of Board Decisions, entities would be allowed to early adopt the “separate presentation requirement for only those hybrid financial liabilities that would continue to qualify and be measured at [fair value through net income] under the tentative model as if the entity had early adopted the proposed conditional [FVO] requirement.” The Board decided to ask constituents for feedback on this tentative decision in the ED.

The Board expects to decide this month on the length of the comment period and to issue an ED in early 2013.

[1] The FASB published its original exposure document on the accounting for financial instruments in 2010.