In its most recent meeting (Feb. 24), the Financial Accounting Standards Board decided to grant private banks and other private entities with consolidated total assets of less than $1 billion a four-year grace period to comply with its proposed new rules in Accounting for Financial Instruments. During the four-year delay, however, the qualified entities would still have to disclose certain loans and core deposit liabilities at fair value in the footnotes to their financial statements, as measured by the “exit price” notion of FASB Accounting Standards CodificationTM Topic 820, Fair Value Measurements and Disclosures (formerly FAS 157).
The debate over the deferral was apparently contentious; FASB board members who generally prefer a cost-based approach for measuring and accounting for financial instruments plan to issue formal dissents. According to a public summary of the meeting, the Board also discussed the accounting for financial liabilities under the equity method, and how to address changes in an entity’s own credit risk of financial liabilities measured at fair value.
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