Tentative Board Decisions

Tentative Board decisions are provided for those interested in following the Board’s deliberations. All of the reported decisions are tentative and may be changed at future Board meetings.

June 11, 2014 FASB Board Meeting

Disclosure Framework—Disclosures about Defined Benefit Plans. The Board discussed potential changes to disclosures that employers provide about defined benefit plans on the basis of the concepts and decision questions in the recently issued proposed FASB Concepts Statement, Conceptual Framework for Financial Reporting Chapter 8: Notes to Financial Statements.

The Board made no technical decisions.

Accounting for Financial Instruments—Classification and Measurement. The Board continued redeliberating the February 2013 proposed Accounting Standards Update, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, specifically discussing the presentation and disclosure of financial instruments.

Presentation of Financial Instruments in the Statement of Comprehensive Income

The Board decided to retain current GAAP on presentation requirements for financial instruments in the statement of comprehensive income.

Disclosures about Fair value of Financial Instruments Measured at Amortized Cost

The Board decided that an entity should only disclose the level of the fair value hierarchy within which the fair value measurements are categorized in their entirety (Level 1, 2, or 3). In addition the Board decided to require the disclosure about fair value of financial assets measured at amortized cost to be disaggregated into major categories of those assets.

Additionally, the Board decided to retain the existing Topic 320, Investments—Debt and Equity Securities, disclosures for sales or transfers of securities classified as held to maturity.

Disclosure Related to Available-for-Sale Securities Measured at FV-OCI

The Board decided to retain the current disclosure requirements in Topic 320 for securities classified as available for sale.

Disclosure Related to Equity Investments without Readily Determinable Fair Values

The Board decided that an entity should disclose 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. The Board decided that an entity would not have to disclose the information that it considered in reaching the carrying amounts and upward or downward adjustments resulting from observable price changes.

Next Steps

The Board will continue to discuss disclosure about the following items:
  1. Reclassification of financial assets from one measurement category to another
  2. Bifurcated hybrid financial instruments
  3. Core deposit liabilities.

Accounting for Financial Instruments—Impairment. The Board discussed the impairment of financial assets subsequently identified for sale and certain beneficial interests in securitized financial assets.

Loans Subsequently Identified for Sale

Topic 310, Receivables, requires an entity to transfer loans into the held-for-sale classification and carry those loans at the lower of cost or fair value once it has decided to sell loans not previously classified as held-for-sale. The Board decided that upon transfer, an entity 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.

Debt Securities Subsequently Identified for Sale

For a debt security subsequently identified for sale, the Board decided that an entity should adjust its impairment allowance for the debt security to be equal to the difference between the debt security’s fair value and its amortized cost basis.

Certain Beneficial Interests in Securitized Financial Assets

The Board decided that an entity 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 (that is, the difference between contractual and expected cash flows attributable to credit would not be included in interest income).