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.
Financial instruments—credit losses implementation. The Board discussed the following issues on troubled debt restructurings (TDRs) that were unresolved at the Credit Losses Transition Resource Group meeting on June 12, 2017:
- Topic 1: Identification of reasonably expected TDRs
- Topic 2: Measurement of reasonably expected TDRs.
The Board agreed with the staff’s recommendation that when a loan is individually identified as a reasonably expected TDR (View B from Memo No. 6A, Addendum to Memo No. 6—Accounting for Troubled Debt Restructurings), all effects of the TDR should be reflected in the allowance for credit losses. The Board also agreed that the application of View C from Memo No. 6A for identification of TDRs would not be consistent with current guidance or future guidance under Topic 326 on credit losses.
Topic 2: Measurement of Reasonably Expected TDRs
The Board agreed with the staff’s recommendation that at the point at which an individual loan is specifically identified as a reasonably expected TDR, an entity must use a Discounted Cash Flow (DCF) method if the TDR involves a concession that can be captured using only a DCF method (or reconcilable method).