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.

April 22, 2015 FASB Board Meeting

Disclosure Framework—Entity’s Decision Process. The Board discussed additional outreach performed by the staff following the decisions reached at the February 18, 2015 Board meeting. The Board concluded that it has received sufficient information and analysis to inform its decisions about the proposed changes and that all the relevant issues related to this phase of the project have been addressed. The Board decided, subject to what else it will learn through public exposure, that the expected benefits of the proposed changes justify the perceived costs of change.

The Board decided that the proposed changes would be effective upon issuance. The proposed changes would be applied prospectively with the option for retrospective application.

The Board decided to send out for external review a draft of its decisions on this phase of the project. The Board will discuss any substantive comments received on the external review draft at a future Board meeting.

Accounting for Financial Instruments—Impairment. The Board continued redeliberating the December 2012 proposed Accounting Standards Update, Financial Instruments—Credit Losses (Subtopic 825-15), specifically discussing the scope of purchased credit impaired (PCI) assets.

Definition of PCI Assets

The Board decided to amend the definition of PCI assets in the proposed Update so that assets with more than insignificant credit deterioration since origination would be accounted for under a gross-up approach. Under the gross-up approach, the amortized cost of the PCI asset at initial recognition would be the sum of the purchase price and the associated expected credit loss at the date of purchase. The definition of PCI assets in the proposed Update only included assets that experienced a significant deterioration in credit quality since origination.

Financial Assets Acquired in a Business Combination

The Board discussed whether all financial assets acquired in a business combination should be accounted for under the gross-up approach and decided that only those purchased assets in a business combination that qualify as PCI assets would be accounted for under the gross-up approach.

Accounting for Financial Instruments—Hedging. The Board continued deliberating the May 2010 proposed Accounting Standards Update, Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities—Financial Instruments (Topic 825) and Derivatives and Hedging (Topic 815).

The Board discussed the following issues:
  1. Hedges of benchmark interest rates under Topic 815
  2. Fair value hedges of benchmark interest rates
    1. “Total coupon” issue
    2. Hedging callable debt
    3. Partial term hedging
  3. Shortcut and critical terms match methods
  4. Implications of a reasonably effective threshold for hedges of financial assets and liabilities.
No technical decisions were made.