Deloitte
Accounting Research Tool
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Chapter 12 — Fair Value Option

12.4 Presentation

12.4 Presentation

Footnotes

7
Industry or regulatory guidance may require that certain entities separately present interest from other changes in fair value for certain interest-bearing financial instruments. For example, bank holding companies, brokers and dealers in securities, and investment companies generally present interest separately from other changes in fair value in their income statements.
8
ASC 948-310-35-2 establishes interest recognition guidance for HFS mortgage loans. That guidance precludes an entity from amortizing purchase discounts. See further discussion in Example 12-11.
9
Banking institutions may use a different title for this line item (e.g., amounts related to mortgage loans may be presented as a line item titled “mortgage banking income”).
10
ASC 310-20 requires entities to defer loan origination fees and direct loan origination costs (see ASC 310-20-25-2). However, ASC 310-20-15-3 explicitly states that ASC 310-20 does not apply to “[n]onrefundable fees and costs associated with originating or acquiring loans that are carried at fair value if the changes in fair value are included in earnings of a business entity or change in net assets of a not-for-profit entity.”
11
SEC Regulation S-X, Article 9, requires bank holding companies that are SEC registrants to present separate totals for interest income, interest expense, other income, and other expenses. The U.S. banking regulators’ call report instructions similarly require that regulated banking institutions present separate totals for interest income, interest expense, noninterest income, and noninterest expense.
12
If the banking institution is merely acting as an agent in the origination of a loan, it would generally be required to report fees and costs associated with the origination of a loan on a net basis.
13
The guidance in this section is also relevant to loans and receivables that have been recognized at fair value by using the FVO in ASC 825 or ASC 815-15 because, as discussed in Section 12.5.2, ASC 825 requires disclosure of “[t]he estimated amount of gains and losses [for the period] that are attributable to changes in the instrument-specific credit risk” when these financial assets are recognized at fair value by using the FVO.
14
This method of computing the component of the total change in fair value that is attributable to instrument-specific credit risk is illustrated in paragraphs B5.7.18 and IE1–IE5 of IFRS 9.