• Register
Return to: Home > News > Standards > FASB to simplify financial instruments accounting

FASB to simplify financial instruments accounting

The Financial Accounting Standards Board (FASB) has proposed to improve financial reporting by providing a comprehensive measurement framework for classifying and measuring financial instruments.

The proposal issue, the Accounting Standards Update Financial Instruments -- Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, is part of FASB's joint project with the International Accounting Standards Board (IASB) on financial instruments.

Under the proposal, the classification and measurement of a financial asset would be based on the asset's cash flow characteristics and the entity's business model for managing the asset, rather than on its legal form.

The proposal also would require financial liabilities to generally be carried at cost, unless the reporting organisation's business strategy is to subsequently transact at fair value or the obligation results from a short sale.

"The proposed accounting standard would measure financial assets based on how a reporting entity would realise value from them as part of distinct business activities, while the measurement of financial liabilities would be consistent with how the entity expects to settle those liabilities," FASB chairman Leslie Seidman explained.

The proposal is the most recent step of FASB and IASB's joint work on financial instrument standards that first appeared on in its agenda in 2010.

"This revised proposal is responsive to the feedback the FASB received on our 2010 Exposure Draft, it simplifies the multitude of classification methods currently in use, and it offers an opportunity for convergence with the IASB's proposal issued last November," Seidman said.

Stakeholders are encouraged to review the proposal and comment on it by 15 May 2013.

Related articles

FASB goes for fair value

IASB issues IFRS 9 changes

Related links

The Financial Accounting Standards Board

The International Accounting Standards Board

Top Content

    Choosing the right location can have cast-iron benefits

    As Game of Thrones, one of the biggest television shows of all time, comes to an end, Joe Pickard looks at how tax incentives offered to television and film production companies help the wider economy.

    read more

    Primary financial statements: a game changer in reporting?

    International Accounting Standards Board chair Hans Hoogervorst delivered a speech at the Seminario International sobre NIIF y NIF, organised by the Consejo Mexicano de Normas de Información Financiera in Mexico. The Accountant presents the highlights.

    read more

    FASB readies standards for the netflix generation

    The US Financial Accounting Standards Board (FASB) has updated its accounting standard for entertainment, with a specific eye on keeping up to date with how episodic content, such as television programmes, is consumed in the modern world. Jonathan Minter reports.

    read more

    Brexit: why it takes two to tango

    Former TA editor Vincent Huck, now editor of Insurance Asset Risk, looks at why Brexit might unleash geopolitical intrigue in Europe’s accounting standard-setting scene – and why IFRS 17 will be an incredible source of opportunity for firms in the coming years.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.