SUMMARY OF BOARD DECISIONS
Summary of Board decisions are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions are included in an Exposure Draft for formal comment only after a formal written ballot. Decisions in an Exposure Draft may be (and often are) changed in redeliberations based on information provided to the Board in comment letters, at public roundtable discussions, and through other communication channels. Decisions become final only after a formal written ballot to issue an Accounting Standards Update.
March 17, 2010 FASB Board Meeting
- The financial liability meets the conditions of the fair value-other comprehensive income category.
- Measurement of a financial liability at fair value would create or exacerbate an accounting mismatch of recorded assets and liabilities.
- A financial liability is contractually linked to an asset measured at amortized cost.
- A financial liability is issued by and recorded in, or pushed down to, an operating segment of which less than 50 percent of the segment’s recognized assets are measured at fair value.
- A financial liability of a consolidated entity that is not evaluated as being contractually linked to an asset or at the operating segment level, of which less than 50 percent of the consolidated entity’s recognized assets are measured at fair value.
Accounting for financial instruments: loan commitments. The Board decided that an entity would classify a loan commitment issued (potential lenders) in the same way that the loan would be classified if the commitment had been exercised and the loan funded. That means that:
- Changes in the fair value of the loan commitment would be recognized in net income if changes in fair value of the loan, if funded, would have been recognized in net income.
- Changes in the fair value of the loan commitment would be recognized in other comprehensive income if changes in fair value of the loan, if funded, would have been recognized in other comprehensive income. In this case, commitment fees would be recognized as a yield adjustment over the term of the funded loan.
The Board decided to provide a scope exception from the proposed guidance for all holders of loan commitments (that is, potential borrowers). In addition, the Board decided to provide a scope exception for issuers of lines of credit issued as part of credit card arrangements. To resolve the overlap with FASB Accounting Standards Codification™ Topic 815, Derivatives and Hedging, loan commitments that are subject to the proposed guidance would no longer be within the scope of Topic 815.
Accounting for financial instruments: scope. The Board clarified that its decision at the February 24, 2010 meeting creating a limited, four-year delay in the effective date for certain nonpublic entities would not apply to conduit bond obligors for conduit debt securities that are traded in a public market. Such conduit bond obligors are considered public entities.
The Board decided that the scope of the proposed Update should exclude the receivables and payables of not-for-profit entities that represent pledges arising from voluntary nonreciprocal transfers.
The Board decided that the measurement and reporting guidance developed in this project should apply to the financial liabilities of brokers and dealers in securities, thus permitting the change in fair value for some liabilities to be included in other comprehensive income. However, the Board decided that the financial assets of those entities should be reported at fair value with changes in fair value included only in net income.
The Board also decided that the financial assets and liabilities of investment companies should be reported at fair value with changes in fair value included in determining the net increase (decrease) in net assets resulting from operations.
Agenda decision announcement: disclosures about an employer’s participation in a multiemployer plan. The FASB chairman announced that he added a project to the Board’s agenda to improve disclosures made by an employer about its participation in a multiemployer plan. Although this is not a joint project with the IASB, the Board will consider international convergence by evaluating disclosures about multiemployer plans proposed by the IASB in its ongoing project on postemployment benefits (including pensions). The FASB staff indicated that they expected to ask the Board to deliberate in April and would propose a project timetable that could make the new disclosures effective for year end 2010 reporting.