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.
Wednesday, April 27, 2016 FASB Board Meeting
Financial instruments—impairment. The Board continued redeliberations on its December 2012 proposed Accounting Standards Update, Financial Instruments—Credit Losses (Subtopic 825-15), specifically discussing vintage disclosures, effective dates, and analysis of the costs and benefits.
Vintage Disclosures
The Board decided not to make any amendments for public business
entities that are U.S. Securities and Exchange Commission (SEC) filers
for the vintage disclosures.
The Board decided that public business entities that are not SEC filers
would be permitted to provide their vintage disclosures using a phase-in
transition approach. The phase-in transition approach would require
three origination years to be disclosed (including the originations
during the first year of adoption), and then an incremental year for
every fiscal year thereafter until five separate fiscal years are
disclosed, consistent with SEC filers. For example, the phase-in
transition approach would work as follows assuming a calendar-year-end
company:
- For the first annual reporting period ended December 31, 2021
after the adoption date of January 1, 2021, an entity would disclose the
end-of-period amortized cost basis of the current-period originations
within 2021, as well as the two origination years of 2020 and 2019. The
December 31, 2021 ending amortized cost basis would be presented in
aggregate for all origination periods before the three years that are
separately presented.
- For the second annual reporting period ended December 31, 2022,
an entity would disclose the end-of-period amortized cost basis of the
current-period originations within 2022, as well as the three
origination years of 2021, 2020, and 2019. The December 31, 2022 ending
amortized cost basis would be presented in aggregate for all
origination periods before the four years that are separately presented.
- For the third annual reporting period ended December 31, 2023,
an entity would disclose the end-of-period amortized cost basis of the
current-period originations within 2023, as well as the four origination
years of 2022, 2021, 2020, and 2019. The December 31, 2023 ending
amortized cost basis would be presented in aggregate for all origination
periods before the five years that are separately presented.
- For interim period disclosures within the years discussed above,
the current year-to-date originations would be disclosed as the
originations in the interim reporting period.
The Board decided that all other entities, including not-for-profit
organizations and employee benefit plans, would not be required to
disaggregate credit quality indicators by the year of origination.
Effective Dates
The Board decided to defer the planned effective dates by one year to the following:
- For public business entities that meet the definition of an SEC
filer, the forthcoming standard will be effective for fiscal years (and
interim periods within those fiscal years) beginning after December 15,
2019.
- For other public business entities, the forthcoming standard
will be effective for fiscal years beginning after December 15, 2020,
including interim periods within those fiscal years.
- For all other entities, including not-for-profit organizations
and employee benefit plans, the forthcoming standard will be effective
for fiscal years beginning after December 15, 2020, and interim periods
within fiscal years beginning after December 15, 2021.
- Early adoption will be permitted for all entities for fiscal
years beginning after December 15, 2018, including interim periods
within those fiscal years.
Analysis of the Costs and Benefits
The Board decided that it has received sufficient information and
analysis to make an informed decision on the perceived benefits and
related costs of the changes to GAAP that will result from the
forthcoming credit losses standard. The Board concluded that the
benefits of those changes justify the related costs and directed the
staff to draft a final Accounting Standards Update for vote by written
ballot.
Next Steps
The staff plans to draft a final Accounting Standards Update for vote by written ballot.