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.

August 25, 2010 FASB Board Meeting

1. Creditors should be explicitly precluded from using the borrower’s effective rate test (in Topic 470, Debt) in its evaluation of whether a modification was executed at a market rate.
    
2. Guidance should be clarified to note that:
   1. A situation in which a market rate is not readily available is a strong indication that the modification was executed at a rate that is below market.
   2. A modification that results in a temporary or permanent increase to the contractual interest rate cannot be presumed to be at a rate that is at or above market.
       
3. Guidance should be clarified to note that a borrower that is not currently in default may still be considered to be experiencing financial difficulty.
    
4. A creditor should not conclude that a modification is not a troubled debt restructuring simply because a delay in payment resulting from that modification is insignificant.
    
5. There should be no change to the guidance in paragraph 310-40-50-2 that allows the removal of a loan previously identified as a troubled debt restructuring from associated disclosure requirements, if the criteria therein are met.
    
6. There should be no change to the treatment of purchased credit impaired loans (that is, purchased credit impaired loans, other than those accounted for within a pool under Subtopic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, should remain in the scope of troubled debt restructuring guidance).

1. For disclosure purposes, the proposed clarifications will be effective for interim and annual periods ending after June 15, 2011, applied retrospectively to modifications occurring on or after the beginning of the earliest period presented.
    
2. For impairment purposes, the proposed clarifications will be effective on a prospective basis for interim and annual periods ending after June 15, 2011. An entity should disclose the total amount of loans and the associated reserves related to those loans that are considered impaired under Section 310-10-35, Subsequent Measurement, as a result of the clarifications in guidance for which impairment was previously accounted for under Subtopic 450-20, Loss Contingencies.