NEWS RELEASE 04/05/11
FASB Issues Accounting Standards Update to Improve Financial Reporting about
Troubled Debt RestructuringsNorwalk, CT, April 5, 2011—The
Financial Accounting Standards Board (FASB) today issued Accounting Standards
Update (Update) No. 2011-02, Receivables (Topic 310): A Creditor’s
Determination of Whether a Restructuring Is a Troubled Debt Restructuring.
The Update will improve financial reporting by creating greater consistency in
the way GAAP is applied for various types of debt restructurings.
Update clarifies which loan modifications constitute troubled debt
restructurings. It is intended to assist creditors in determining whether a
modification of the terms of a receivable meets the criteria to be considered a
troubled debt restructuring, both for purposes of recording an impairment loss
and for disclosure of troubled debt restructurings.
“The increase in
loan modifications caused by the recent economic downturn led investors,
regulators, and practitioners to ask the Board to clarify what types of
modifications should be considered troubled debt restructurings for accounting
and disclosure purposes,” states FASB Chairman Leslie F. Seidman. “This Update
provides that guidance, resulting in greater consistency and transparency in the
reporting of these transactions.”
For public companies, the new guidance
is effective for interim and annual periods beginning on or after June 15, 2011,
and applies retrospectively to restructurings occurring on or after the
beginning of the fiscal year of adoption. For nonpublic entities, the amendments
in the Update are effective for annual periods ending on or after December 15,
2012, including interim periods within that annual period. Early application is
The Update is available at www.fasb.org.
the Financial Accounting Standards Board
Since 1973, the
Financial Accounting Standards Board has been the designated organization in the
private sector for establishing standards of financial accounting and reporting.
Those standards govern the preparation of financial reports and are officially
recognized as authoritative by the Securities and Exchange Commission and the
American Institute of Certified Public Accountants. Such standards are essential
to the efficient functioning of the economy because investors, creditors,
auditors, and others rely on credible, transparent, and comparable financial
information. For more information about the FASB, visit our website at www.fasb.org.