Tentative Board decisions are provided for those interested in following the Board’s deliberations. All of the reported decisions are tentative and may be changed at future Board meetings.
Wednesday, March 16, 2022 FASB Board Meeting
Financial instruments—credit losses (Topic 326)—targeted improvements to the accounting for troubled debt restructuring for creditors. The Board redeliberated the determination of the effective interest rate for entities that use a discounted cash flow model to measure the current expected credit losses (CECL) allowance for assets that are modified and accounted for as a continuation of the original asset.
Effective Interest Rate
The Board decided to require that an entity use an effective interest rate derived from the post-modification contractual interest rate for entities using a discounted cash flow approach to measure the allowance for credit losses for financial assets that are modified and accounted for as a continuation of the original financial asset.
The Board directed the staff to draft a final Accounting Standards Update for vote by written ballot.
Reference rate reform—deferral of the sunset date of Topic 848. The Board discussed a change to the scope of the project to include an additional issue on the definition of the Master Glossary term Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate (SOFR Swap Rate).
The Board decided to:
- Modify the scope of the project to include an amendment to the definition of SOFR Swap Rate
- Amend the definition of SOFR Swap Rate so that any swap rate based on SOFR meets the definition and, therefore, qualifies as a benchmark interest rate for purposes of applying hedge accounting
- Affirm the decisions made at the December 15, 2021 Board meeting on transition, effective date, and comment period length.
The Board directed the staff to continue drafting a proposed Accounting Standards Update for vote by written ballot.