FASB Discusses Projects on Credit Losses and Reference Rate Reform
March 17, 2022
At its March 16, 2022, meeting, the FASB discussed its projects on the following topics:
- Financial Instruments — Credit Losses — Targeted Improvements to the Accounting for Troubled Debt Restructuring for Creditors — The Board tentatively decided to require entities to “use an effective interest rate derived from the post-modification contractual interest rate for entities using a discounted cash flow approach to measure the allowance for credit losses for financial assets that are modified and accounted for as a continuation of the original financial asset.” Further, the Board directed the staff to draft a final Accounting Standards Update (ASU) on this topic for a vote by written ballot.
- Reference Rate Reform — Deferral of the Sunset Date of Topic 848 — The Board tentatively decided to modify the scope of the project to include an amended definition of the Secured Overnight Financing Rate Overnight Index Swap Rate. In addition, the Board affirmed its decisions on transition, effective date, and comment-period length and directed the staff to draft a proposed ASU for a vote by written ballot.