FASB May Delay Troubled Debt Restructuring Standard for Public Entities


FASB on Thursday proposed to delay indefinitely the effective date of new disclosures about troubled debt restructurings in Accounting Standards Update (ASU) no. 2010-20 for public-entity creditors. Currently, the new standard is scheduled to become effective for interim and annual reporting periods ending on or after Dec. 15, 2010.

 

Comments on the proposal are due Dec. 24.

 

The board said the proposal is a response to constituents’ concerns that the introduction of new disclosure requirements (paragraphs 310-10-50-31 through 50-34 of the FASB Accounting Standards Codification) about troubled debt restructurings in one reporting period followed by a change in what constitutes a troubled debt restructuring shortly thereafter would be burdensome for preparers and may not provide financial statement users with useful information.
 

The delay would apply to all public-entity creditors that modify financing receivables within the scope of the disclosure requirements about troubled debt restructurings in ASU no. 2010-20. For nonpublic entities, the disclosures would still be scheduled to go into effect for annual reporting periods ending on or after Dec. 15, 2011.

The amendments are included in Proposed ASU, Receivables (Topic 310): Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20. FASB said constituents asked the board to defer the effective date of the disclosure requirements for public entities about troubled debt restructurings in ASU no. 2010-20, Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses, to be concurrent with the effective date of the guidance for determining what constitutes a troubled debt restructuring, as presented in the Proposed ASU, Receivables (Topic 310): Clarifications to Accounting for Troubled Debt Restructurings by Creditors.

The board said the delay would give it time to complete its deliberations on what constitutes a troubled debt restructuring. The effective date of the new disclosures about troubled debt restructurings for public entities and the guidance for determining what constitutes a troubled debt restructuring would then be coordinated. The board said the guidance for determining what constitutes a troubled debt restructuring is anticipated to be effective for interim and annual periods ending after June 15, 2011.

 

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