FASB proposes shortening amortization period for certain debt securities

By Ken Tysiac

FASB proposed an accounting standard Thursday that would shorten the amortization period for callable debt securities purchased at a premium.

The proposal would require the premium to be amortized to the earliest call date. The proposal would not require an accounting change for securities purchased at a discount; the discount would continue to be amortized to maturity.

The approach has been proposed to more closely align the amortization period of premiums and discounts to expectations incorporated in market pricing on the underlying securities. The proposal would more closely align interest income recorded on bonds at a premium or a discount with the economics of the underlying instrument.

Under the proposal, an entity would apply the proposed amendments through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. An entity would provide disclosures about a change in accounting principle in the period of adoption.

Ken Tysiac (ktysiac@aicpa.org) is a JofA editorial director.

SPONSORED REPORT

Revenue recognition: A complex effort

Implementing the new standard requires careful judgment. Learn how to make significant accounting judgments and document them and collaborate with peers for consistent application.

TECHNOLOGY Q&A

How to create maps in Excel 2016

Microsoft Excel 2016 has two new mapping capabilities. J. Carlton Collins, CPA, demonstrates how to make masterful 2D and 3D maps in Excel 2016.

QUIZ

News quiz: Economy and health care changes top CPAs’ list

CPA decision-makers’ economic outlook and the House Republicans’ proposed tax changes as part of replacing the Patient Protection and Affordable Care Act received attention recently. See how much you know with this short quiz.