FASB - Changes to financial assets impairment for financial instruments 

June 16:  The FASB, at a June 11 meeting, continued redeliberations on its proposed Accounting Standards Updates (ASUs) on financial instruments impairment and classification and measurement.

The FASB reached tentative decisions on the following proposed impairment ASU:


  • Loans transferred into held-for-sale classification. The cost basis on the transfer date would be the amortized cost basis (excluding the allowance for expected credit losses). A valuation allowance would be recognized equal to the amount by which the cost basis exceeds the fair value.
  • Debt securities classified as held-to-maturity or available-for-sale that are subsequently identified for sale. An entity would adjust its impairment allowance to be the difference between the fair value and the amortized cost.
  • Beneficial interests in securitized financial assets that have a significant difference between contractual and expected cash flows. The recognition and measurement of the impairment allowance would be consistent with the approach required by the proposed impairment ASU for purchased-credit impaired financial assets.

On the proposed classification and measurement ASU, the FASB tentatively decided to not change the current U.S. GAAP for:


  • Presentation in the statement of comprehensive income of amounts relating to financial instruments
  • Disclosures for available-for-sale securities and sales or transfers of held-to-maturity securities

Read a June 2014 report [PDF 415 KB] prepared by KPMG LLP: Defining Issues: Financial Instruments: Changes to Financial Assets Impairment, Classification and Measurement




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