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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 a final standard.
July 15, 2009 Board Meeting Financial
instruments: improvements to recognition and measurement. The Board
decided on a model to improve financial reporting for financial instruments.
The Board reached the following decisions:
- The Board decided that all financial instruments will be presented on the
balance sheet at fair value with changes in value recognized in net income or
other comprehensive income with an optional exception for own debt in certain
circumstances, which will be measured at amortized cost. For those
financial instruments whose change in value is recognized in other
comprehensive income, amortized cost will be displayed on the balance sheet in
addition to a fair value adjustment to arrive at fair value.
- The Board decided that changes in an instrument’s value may be recognized
in other comprehensive income on the basis of qualifying criteria related to
an entity’s management intent/business model and the cash flow variability of
the instrument. The Board will provide additional guidance on how to apply
those qualifying criteria. The Board decided that changes in value for
derivatives, equity securities, and hybrid instruments containing embedded
derivatives requiring bifurcation under FASB Statement No. 133, Accounting
for Derivative Instruments and Hedging Activities, will be recognized in
net income. The Board decided that for all financial instruments,
interest and dividends will continue to be recognized in net income.
Credit impairments, as well as realized gains and losses from sale and
settlement, also will be recognized in net income. The classification
of instruments will be determined at initial recognition of the instrument and
will not be subsequently changed.
- The Board decided to require one statement of financial performance with
subtotals for net income and other comprehensive income. It also
decided to continue to only require earnings per share for net income.
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