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.

May 9, 2012 FASB Board Meeting

Accounting for financial instruments: impairment. The FASB discussed modified debt instruments and how they should be considered within the context of the “three bucket” model.

The Board tentatively decided that an entity would utilize a credit impairment allowance measurement objective of “lifetime expected credit losses” for modified debt instruments in which the lender, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the borrower that the lender would not otherwise consider (referred to as troubled debt restructurings under current U.S. GAAP). The Board concluded that in these circumstances a modified debt instrument is a continuation of the existing instrument and would be evaluated for credit deterioration in accordance with the instrument’s original terms.

Accounting for financial instruments: liquidity and interest rate risk disclosures.

The Board clarified its intent to require specific qualitative disclosures in the proposed Accounting Standards Update by deciding that a reporting entity should provide any additional quantitative or narrative disclosure necessary to provide users of financial statements with an understanding of its exposure to liquidity risk and interest rate risk. To meet that objective, the Board decided that a reporting entity should discuss the significant changes in timing and amounts, as reflected by proposed tabular disclosures, that occur from the last reporting period to the current period, discussing reasons for the change(s) and actions taken, if any, during the current period to manage the exposure.

The Board also clarified its intent with respect to defining the term financial institution as it would be used in the proposed Update. The Board decided to create a definition through the drafting of the proposed Update that focuses on business activities that would lead a reporting entity or a reportable segment to be considered a financial institution. The Board decided that the definition will be developed using the basic premise that a financial institution engages in activities with the intent of earning its primary source of income as a result of managing the difference between returns paid on its financial liabilities and returns received on its financial assets. An entity or reportable segment that meets a definition of financial institution that is developed on this premise should be required to provide the disclosures in the proposed Update that apply only to financial institutions. The Board also decided that an entity or reportable segment that provides insurance should be required to provide the same disclosures. The Board further clarified that an entity that carries substantially all of its assets at fair value with changes in fair value recognized in net income should not be required to provide the disclosures in the proposed Update that apply only to financial institutions.