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.
September 7, 2012 FASB Board Meeting
Accounting
for financial instruments: impairment. At the September 7, 2012
Board meeting, the Board continued its development of the Current Expected
Credit Loss (CECL) Model.
The Board discussed the inclusion of a
nonaccrual concept in the financial instrument model. The Board tentatively
decided that, for purposes of interest income recognition, an entity should
cease the accrual of interest income when it is not probable that the entity
will receive full payment of principal or interest (that is, when the entity can
no longer assert that the likelihood of collection is probable). If it is not
probable that the entity will receive full payment of principal, the entity
should apply the cost recovery method to account for payments received when a
loan is placed on nonaccrual status. If it is probable that the entity will
receive full payment of principal but it is not probable that the entity will
receive full payment of interest, the entity should apply the cash basis method
to account for payments received when a loan is placed on nonaccrual status.
The Board also discussed how the CECL model would apply to debt securities
and financial assets measured at fair value through other comprehensive income
(FV-OCI). The Board tentatively decided that the CECL model should apply to
financial assets classified at amortized cost and financial assets measured at
FV-OCI. However, as a practical expedient, an entity need not recognize
expected credit losses for financial assets classified as FV-OCI when both of
the following conditions are met: