FASB Summary of October 1, 2003 Board Meeting Discussion
Derivatives Implementation Group
Summary of October 1, 2003 Board Meeting Discussion on Statement 133 Implementation Issues
Agenda decision: loan commitments. At its October 1, 2003 meeting, the Board added a project to its agenda that would provide clarification of FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities (as amended). The project will address the valuation of interest rate loan commitments accounted for as derivatives under Statement 133 (as amended). Currently, there is diversity in practice in determining the fair value of loan commitments that must be accounted for as derivatives, as well as diversity in the recognition of such commitments as assets.
The key objectives of the project will be to determine what information the issuer should use to determine the fair value of a loan commitment that is accounted for as a derivative under Statement 133 (as amended), and whether it is appropriate for a loan commitment to be recorded as an asset by the issuer of that commitment.
The Board directed the FASB staff to prepare a proposal of the project’s scope and to prepare a timetable for the project.