ABA suggests modifications to proposed monetary property accounting requirements

The American Bankers Association on Wednesday suggested a number of modifications to a proposed Financial Accounting Standards Board upgrade worrying accounting for gotten monetary possessions. The FASB direct exposure draft presently in factor to consider would remove the requirement to recognize an acquired monetary property with more-than-insignificant credit wear and tear (PCD possessions). It would likewise use the gross-up design, presently used to PCD possessions, to all gotten, experienced monetary possessions, consisting of those gotten as part of a company mix.

In its remarks, ABA used a number of proposed modifications to the direct exposure draft that its members consider as essential to accomplish FASB’s designated goals of improving comparability and lowering the intricacy arising from 2 acquisition accounting techniques. Those goals need harmonization of the gross-up design throughout the broadened population of gotten monetary possessions, the association stated.

“To do so, the requirement to account for discounts, premiums and expected credit losses at the individual financial asset level must be amended,” ABA stated. “Amending the individual financial asset level requirement will create closer alignment with current accounting practices and will have the additional benefit of addressing many of the identified operational concerns stemming from the proposed amendments. In addition, the transition method must be amended to a prospective approach with an option to apply a modified retrospective approach.”