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 an Accounting Standards Update.
April 17, 2012 FASB/IASB Joint Board MeetingInvestment
companies.The IASB and the FASB discussed summaries of the feedback
received on the IASB exposure draft, Investment Entities, and the FASB
Proposed Accounting Standards Update, Financial Services—Investment
Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure
Requirements. The meeting was educational in nature, and the Boards were
not asked to make any decisions.
for financial instruments: classification and measurement. The
IASB and the FASB discussed the business model assessment for classifying
financial assets at amortized cost and bifurcation of financial assets and
Business Model Assessment for Amortized Cost
Classification for Financial Assets
The Boards tentatively decided
that financial assets would qualify for amortized cost if the assets are held
within a business model whose objective is to hold the assets in order to
collect contractual cash flows. The Boards tentatively decided to clarify the
primary objective of hold to collect by providing additional
implementation guidance on the types of business activities and the frequency
and nature of sales that would prohibit financial assets from qualifying for
amortized cost measurement.
Bifurcation of Financial Assets and
The Boards tentatively decided that financial
assets that contain cash flows that are not solely principal and interest would
not be eligible for bifurcation. Rather, they would be classified and measured
in their entirety at fair value through net income. The Boards tentatively
decided that financial liabilities would be bifurcated using the existing
bifurcation requirements in IFRS 9, Financial Instruments, and U.S.
GAAP. The IASB also affirmed that the "own credit" guidance in IFRS 9 would be
retained. The FASB will discuss "own credit" presentation requirements at a
future FASB-only meeting.
April 18, 2012 FASB/IASB Joint Board
for financial instruments: impairment. The IASB and the FASB
clarified the attributes of an expected credit loss estimate to address concerns
raised about the use of the term expected value.
clarified that an estimate of expected credit losses should reflect the
The Boards clarified that an entity should
consider information that is reasonably available without undue cost and effort
in estimating expected credit losses.
- All reasonable and supportable information considered relevant in making
the forward-looking estimate
- A range of possible outcomes and the likelihood and reasonableness of
those outcomes (that is, it is not merely an estimate of the "most likely
- The time value of money.
The Boards clarified that the
Bucket 1 measurement approach would be explained as "expected losses for those
financial assets on which a loss event is expected in the next 12
In further explaining the Bucket 1 approach, the Boards also
- Expected losses are all cash shortfalls expected over the lifetime (that
is, the full loss content) that are associated with the likelihood of a loss
event in the next 12 months; that is, the losses being measured are not only
the cash shortfalls over the next 12 months.
- Estimating lifetime losses should not require a detailed estimate for
periods far in the future, but the degree of detail necessary in forecasting
estimated losses decreases as the forecast period increases.
- Various approaches can be used to estimate the expected losses, including
approaches that do not include an explicit "12-month probability of a loss
event" as an input.
In February 2012
and at this meeting, the Boards discussed whether an expected credit loss model
should be applied to trade receivables without a significant financing
component, as defined in Proposed Accounting Standards Update, Revenue
Recognition (Topic 605): Revenue from Contracts with Customers. In
February, subject to deciding whether an expected loss model should be
applied to these trade receivables, the Boards had tentatively decided how
an expected loss approach would be applied. In February, they also
requested that the staff evaluate whether an expected loss model would be
operational for those trade receivables, which was the basis for the discussions
at this meeting. On the basis of both discussions, the Boards tentatively agreed
that an expected loss model should be applied to trade receivables without a
significant financing component, including a practical expedient that a
provision matrix can be used.
The Boards asked
the staff for an update on the project, including what topics still needed to be
addressed jointly. The staff noted that, with the decisions reached at this
meeting, the general framework of the model was now complete. However, the staff
will prepare joint papers for discussions related to off-balance-sheet items,
disclosures, transition, and any follow-on issues resulting from future
decisions in the classification and measurement project. Each Board may have
separate issues to individually consider in order to address their respective
summary will be posted as soon as it becomes
April 19, 2012 FASB/IASB
Joint Board Meeting
summary will be posted as soon as it becomes