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.
April 20, 2011 FASB Board Meeting
Accounting
for financial instruments. The Board discussed the classification
and measurement of debt instruments that qualify for the amortized cost category
at initial recognition but are subsequently identified for sale. The Board
decided that in such circumstances an entity should continue to classify and
measure the financial assets at amortized cost (less impairments) and recognize
resulting gains, if any, only when the sale is complete. Additionally, the Board
decided that in developing an overall impairment model for financial
instruments, impairment for financial assets subsequently identified for sale
should be recognized in earnings in an amount equal to the entire difference
between the instrument’s amortized cost basis and its fair value.
The
Board also discussed situations in which an entity anticipates that a portion of
a pool of similar assets will be sold while the other portion will continue to
be managed through its customer financing (lending) activities. However, the
individual assets that will be subsequently sold are not specifically identified
for sale at initial recognition. The Board reemphasized that in these
circumstances an entity must classify and measure all financial instruments
according to one of its defined business activities when applying the business
strategy criterion. An entity would not be prevented from managing the same or
similar financial instruments through different business activities.