Dataline: Financial instruments -- An update on the FASB's financial instruments project redeliberations as of June 30, 2011 (No. 2011-26)

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Dataline / In depth 07/07/2011 by Assurance services
Dataline: Financial instruments -- An update on the FASB's financial instruments project redeliberations as of June 30, 2011 (No. 2011-26)

At a glance

The accounting for financial instruments is a priority joint project of the FASB and IASB; however, the FASB and IASB have reached different conclusions on many aspects of the project to date. This PwC Dataline provides an update on the FASB's rediberations as of June 30, 2011.

The accounting for financial instruments is a priority joint project of the FASB and IASB. However, the FASB and IASB have reached different conclusions on many aspects of the project to date. Whereas the IASB has finalized its classification and measurement approach, the FASB is in the process of redeliberating its May 2010 proposal. The FASB has made significant changes from that proposal, including requiring loans that are principally held for collection, bank deposits, and most of an entity's own debt to be classified and measured at amortized cost, and retaining the current criteria for the equity method of accounting.

The FASB and IASB continue to work on developing a joint approach to the accounting for credit impairments. After considering constituent input on the different impairment approaches, the boards have decided to develop a variation of the previous impairment proposals. An exposure draft of the revised impairment proposal is expected by the end of third quarter 2011.

The FASB has obtained feedback on the IASB's proposed revisions to hedge accounting and its own May 2010 proposal. The IASB’s proposal differs significantly from the FASB’s proposal in a number of ways including proposing to extend hedge accounting to components of nonfinancial instruments. The FASB plans to consider the feedback in future redeliberations that will take place later in 2011.

This Dataline summarizes the status of the FASB's redeliberations on the financial instruments project as of June 30, 2011.