RegulationAccounting StandardsFASB acts to ease US bank profit worries

FASB acts to ease US bank profit worries

New position could help banks take some losses out of earnings calculations

The US accounting standards setter has brought out proposals that could help
prop up banks’ profits by changing the way some long-term assets can be valued.

Alongside new guidance on fair value measurement rule FAS 157, which
suggested companies should not use fire-sale prices to value financial assets
during a downturn, the Financial Accounting Standards Board put out a staff
position that would change how companies value
‘other-than-temporary-impairments’ on assets they have no plans to sell.

The position could ease the hit that OTTI charges have been making on the P
&L statement as it will let companies split credit and non-credit losses,
with the latter moving into other comprehensive income and out of the company’s
total earnings calculation, according to
CFO.com

The proposals split the board, with two of the five members against such a
position, but pressure from US lawmakers for action from standards setters to
ease the crisis may have played its part in the approval of the guidance.

Related Articles

FASB publishes US leasing standard

Accounting Standards FASB publishes US leasing standard

2y Calum Fuller, Reporter
IASB calls for one year deferment on IFRS 15 Revenue from Contracts with Customers

Accounting Standards IASB calls for one year deferment on IFRS 15 Revenue from Contracts with Customers

3y Chris Warmoll, Writer
IFRS Foundation calls for delay to revenue recognition

Accounting Standards IFRS Foundation calls for delay to revenue recognition

3y Richard Crump, Writer
FASB votes to defer revenue recognition standard

Accounting Standards FASB votes to defer revenue recognition standard

3y Richard Crump, Writer
FASB considers delay to revenue recognition rules

Accounting Standards FASB considers delay to revenue recognition rules

3y Richard Crump, Writer
IFRS 9 leaves much open to interpretation

Accounting Standards IFRS 9 leaves much open to interpretation

3y Richard Crump, Writer
IASB scraps dual lease accounting model

Accounting Standards IASB scraps dual lease accounting model

3y Richard Crump, Writer
IASB forms working group ahead of IFRS loss model launch

Accounting Standards IASB forms working group ahead of IFRS loss model launch

3y Naomi Rainey, Writer