Dataline: Responses are in on the FASB and IASB's financial instruments classification and measurement proposals (No. 2013-15)

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Dataline / In depth 07/01/2013 by Assurance services
Dataline: Responses are in on the FASB and IASB's financial instruments classification and measurement proposals (No. 2013-15)

At a glance

This Dataline provides a high-level summary of the of the comments received on the board's respective proposals.

The comment periods for the FASB and IASB’s classification and measurement exposure drafts ended on May 15, 2013 and March 28, 2013, respectively. Their proposals would broadly converge the accounting for debt investments and financial liabilities, but there are a number of notable differences, including in the accounting for equity investments.

A majority of respondents to the FASB’s proposal supported the goal of reducing complexity in financial instruments accounting, but many believed it would not be achieved under the proposal. Many felt that the cash flow characteristics test inappropriately limited the number of debt investments that would be eligible for amortized cost or fair value through other comprehensive income measurement. While respondents tended to agree with a business model assessment, a majority felt that the restrictions on sales out of the amortized cost category would inappropriately limit companies' ability to manage their credit risk exposures.

The IASB's proposal, comprising limited amendments to its classification and measurement standard, generally received support. A majority of respondents supported adding a fair value through other comprehensive income category to the amortized cost and fair value through net income categories for debt investments.

Joint redeliberations will begin in July and are expected to run into the fourth quarter of 2013.

This Dataline provides a high level summary of the comments received on the boards' respective proposals.