New Measurement & Classification Guidance for Financial Instruments
On January 5, 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. FASB has backed away from the sweeping overhauls proposed in its 2013 exposure draft, opting instead to make targeted improvements to current guidance. More importantly for financial institutions, FASB has retained the separate models in existing U.S. generally accepted accounting principles for determining classification and measurement of loans and debt securities.
These changes don’t supersede existing specialized accounting guidance for broker-dealers, investment companies and defined benefit and other postretirement plans.