New FASB Proposals Released
The FASB released two proposed accounting standards on Wednesday, 5/26/2010:
Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities—Financial Instruments (Topic 825) and Derivatives and Hedging (Topic 815)
Comprehensive Income (Topic 220): Statement of Comprehensive Income
The significance of the two proposals are that they would require virtually all financial instruments to be recorded at fair value on institution’s financial statements. This would be a radical change to existing financial reporting for lending and depository institutions and an unpopular one for the affected institutions. FASB recognizes this and the significant implementation issues and currently recommends an adoption date of more than 5 years for smaller institutions. The required adoption date for larger institutions is not yet determined.
Two of the five FASB Board members had some significant differences of opinion on the proposed standard.
The appropriate accounting for financial instruments has long been debated by the FASB and these current proposals are a part of a joint project the FASB originally started in 2005 with the IASB.
The two proposals can be found here:
Comprehensive Income (Topic 220): Statement of Comprehensive Income
Comment letters are due by September 30, 2010.
