SEC Amends Accounting Guidance on Other-Than-Temporary Impairment

The SEC’s Office of the Chief Accountant and Division of Corporation Finance on Tuesday announced the release of Staff Accounting Bulletin (SAB) no. 111 that amends Topic 5.M. in the SEC’s Staff Accounting Bulletin Series titled Other Than Temporary Impairment of Certain Investments in Debt and Equity Securities.


The release comes less than two weeks after FASB approved guidance on handling such impairments. Under FASB Staff Position (FSP) no. 115-2 and 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, which was released April 9, once an other-than-temporary impairment is determined for a debt security, the portion of an asset write down attributed to credit losses may flow through earnings and the remaining portion may flow through other comprehensive income, depending on the situation and facts involved. The FSP did not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities.


SAB no. 111 maintains the SEC staff’s previous views related to equity securities and amends Topic 5.M. to exclude debt securities from its scope.


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