Wednesday, January 26, 2011

Fair Value vs. Amortized Cost for Financial Instruments: FASB Moves Toward Business Strategy Criterion, Permitting Loans To Be Held At Amort. Cost

At yesterday's (Jan. 25) Financial Accounting Standards Board meeting, the board tentatively decided to use a 'business strategy' criterion for the classification and measurement of financial instruments at fair value vs. amortized cost. Significantly, this represents a change in the board's earlier proposal to carry loans at fair value. Separately, as previously reported, FASB and the IASB recently announced they would work toward bringing their differing proposals on accounting for credit losses closer together.

Yesterday's decision by FASB on valuation of financial instruments can be thought of in simple terms as falling into 3 'buckets:'

  1. Trading activities, Held for Sale: Fair Value, with all changes in fair value recognized in net income. (FV-NI)
  2. Investments - i.e. investing with a focus on managing risk exposures and maximizing total return: Fair value measurement with qualifying changes in fair value recognized in other comprehensive income. (FV-OCI)
  3. Loans, Customer Financing (managing asset for collection of contractual cash flows through lending/customer financing activity): Amortized Cost.

As reported by BNA's Steve Burkholder today in FASB Shifts to Cost Treatment of Loans,
Away From Proposed Fair Valuation
(subscription required):

The preliminary decision on what FASB's chairwoman, Leslie Seidman, and board
colleagues called “plain vanilla” debt instruments held for contractual collection of payments, as well as receivables, was applauded by the American Bankers Association. Security analysts interviewed by BNA after the meeting were
less happy.

Reclassifications, 'Tainting'
On the question of reclassifications among the above categories, and regarding 'tainting' of remaining assets in a category for which the intent regarding certain assets had changed (e.g. if certain long-term investements were sold for short-term liquidity purposes), FASB decided:

  • reclassifications between categories of financial assets would not be permitted, and

  • subsequent sales would not “taint” an entity’s financial assets classified at amortized cost.

Additional details regarding decisions reached at yesterday's FASB board meeting can be found in FASB's Summary of Board Decisions.



Print this post

17 comments:

joe said...

Thanks for sharing this post with us. It's really an amazing post. Keep posting the good work in future too.

James Rich said...

Thanks for this great article posting. Selective Financial Services provide the financial services to the investors as well as fund seekers.
financial service company

James Rich said...

Do you seek funding and the bank you deal with on a day to day basis has refused to help you?

You might qualify for our new concept and get funded with our help.
Our focus is on socially responsible, green, energy producing projects. The facility is however not limited to these basics, as long as you have a strong management team, a viable business plan, and exceptional growth potential. We also enable finance for growth and consider any commercial business with the potential for a high ROI already within the first year. And we can work with any legal financial transaction offering an above average return on investment.
If your requirement is within these basics, please let us have your answer to this simple question: "Would your own bank provide you with finance, if we guarantee for your loan through Deutsche Bank?"
If you see chances to get funded on that basis, then you should tell us how much money you seek. We will engineer a solution for your immediate funding requirement and explain how you can put this concept to work for you.

Send an email directly to RelationshipManager@SelectiveFinancialServices.com now and visithttp://selectivefinancialservices.com/project-finance

Hayden David said...

I have visited so many sites but I never got the site like yours, amazing posts with informative latest things. Holborn Assets

christina said...

Financial planning is the base of any business and without it, no new business can survive. Financial advisors charge fees for their service and they help in our financial planning.
Holborn Assets

Ronald Rajnesh Gounder said...

I have an excellent provider of BG, SBLC and Loans, he has provided BG for many companys and my clients successfully.
For all inquires Contact:
Mr Ronald Rajnesh Gounder
Email:grounesh.advisory1@gmail.com

Anonymous said...

We are Ireland based major/Direct providers of Fresh Cut BG, SBLC, POF, MTN, Bonds and CDs and this financial instruments are specifically for lease and sale.We are one of the leading Financial instrument providers with offices all over Europe.
we always deliver on time and precision as Set forth in the agreement. You are at liberty to engage our leased facilities into trade programs, project financing, Credit line enhancement, Corporate Loans (Business Start-up Loans or Business Expansion Loans), Equipment Procurement Loans (Industrial Equipment, Air crafts, Ships, etc.) as well as other financial instruments issued from AAA Rated bank such as HSBC Bank Hong Kong, HSBC Bank London, Deutsche Bank AG Frankfurt, Barclays Bank , Standard Chartered Bank and others on lease at the lowest available rates depending on the face value of the instrument needed, Our Terms and Conditions are reasonable.
DESCRIPTION OF INSTRUMENTS:
1. Instrument: Bank Guarantee (BG)/SBLC (Appendix A)
2. Total Face Value: 10M MIN to 50B MAX USD or Euro
3. Issuing Bank: HSBC, Deutsche Bank Frankfurt, UBS or any Top 25 .
4. Age: One Year, One Day
5. Leasing Price: 4+ 1%
6. Sale Price: 32+2%
7. Delivery by SWIFT .
8. Payment: MT103-23
9. Hard Copy: Bonded Courier within 7 banking days.
If you have need for Corporate loans, International project funding, etc. or if you have a client that requires funding for his project or business, We are also affiliated with lenders who specialize on funding against financial instruments, such as BG, SBLC, POF or MTN, we fund 100% of the face value of the financial instrument.
Inquiries from agents/ brokers/ intermediaries are also welcomed; do get back to us if you are interested in any of our services and for quality service.
Name : Cathal Mc Hugh
E-mail : Cathalmchugh0700@gmail.com
Skype id : Cathalmchugh0700@gmail.com

sapana rathod said...

"This highly developed technical world has also changed the whole scenario of the financial service and "Micro Finance Software"

IT - Spring Cleaning said...

The majority of commercial as well as residential cleansing companies provide custom cleansing packages as well as customers can select the particular solutions they require. They may also choose whether they would like to opt with regard to weekly, fortnightly, bi-weekly as well as one-time cleansing services. While it’s better to opt to have an office or home cleaning contract, many home owners need one-off providers when: home cleaning company in dubai

Keat Cheng said...

We are Ireland based major/Direct providers of Fresh Cut BG, SBLC, POF, MTN, Bonds and CDs and this financial instruments are specifically for lease and sale.We are one of the leading Financial instrument providers with offices all over Europe.
we always deliver on time and precision as Set forth in the agreement. You are at liberty to engage our leased facilities into trade programs, project financing, Credit line enhancement, Corporate Loans (Business Start-up Loans or Business Expansion Loans), Equipment Procurement Loans (Industrial Equipment, Air crafts, Ships, etc.) as well as other financial instruments issued from AAA Rated bank such as HSBC Bank Hong Kong, HSBC Bank London, Deutsche Bank AG Frankfurt, Barclays Bank , Standard Chartered Bank and others on lease at the lowest available rates depending on the face value of the instrument needed, Our Terms and Conditions are reasonable.
DESCRIPTION OF INSTRUMENTS:
1. Instrument: Bank Guarantee (BG)/SBLC (Appendix A)
2. Total Face Value: 10M MIN to 50B MAX USD or Euro
3. Issuing Bank: HSBC, Deutsche Bank Frankfurt, UBS or any Top 25 .
4. Age: One Year, One Day
5. Leasing Price: 4+ 1%
6. Sale Price: 32+2%
7. Delivery by SWIFT .
8. Payment: MT103-23
9. Hard Copy: Bonded Courier within 7 banking days.
If you have need for Corporate loans, International project funding, etc. or if you have a client that requires funding for his project or business, We are also affiliated with lenders who specialize on funding against financial instruments, such as BG, SBLC, POF or MTN, we fund 100% of the face value of the financial instrument.
Inquiries from agents/ brokers/ intermediaries are also welcomed; do get back to us if you are interested in any of our services and for quality service.
Name : Keat Cheng
E-mail : keatcheng2@gmail.com
Skype id :keatcheng2@gmail.com

AZRA ISHAQUE said...

We offer certified and verifiable bank instruments via Swift Transmission from a genuine provider capable
of taking up time bound transactions.

FOR LEASING OF BG/SBLC
MINIMUM FACE VALUE OF BG/SBLC = EUR/USD 1M
LEASING FEE = 4%+2%

FOR PURCHASE OF FRESH CUT BG/SBLC
PRICE = 32%+2%
MINIMUM FACE VALUE OF BG/SBLC = EUR/USD 1M

Our BG/SBLC Financing can help you get your project funded, loan financing by providing you with yearly
renewable leased bank instruments. We work directly with issuing bank lease providers, this Instrument can be monetized on your behalf for 100% funding: For further details contact us with the below information.

Contact name: Azra Ishaque

Email : lintel.financialservicesplc@gmail.com

Skype : lintel.financialservicesplc

Dimitrij Conradi said...

We are Providers of all types of BG and SBLC with the best workable procedures. Our BG/SBLC ranges from MT799, MT760,(Both two way confirmation), MT103/23, MT103 (Both can be one way confirmation and two way confirmation) in USD and EUROS. Issuing Bank ranges from Top world 25 banks with face value ranging from 1M EUROS/USD to 10B EUROS/USD

BROKERS ARE WELCOME & 100% PROTECTED!!!
Intermediaries/Consultants/Brokers are welcome to bring their clients and cases to our attention and in complete confidence we will work together for the benefits of all parties involve.

Our BG/SBLC Financing can help you get your project funded, loan financing, please let me know if you are interested in any of our services, by providing you with yearly renewable leased bank instruments. We work directly with issuing bank lease providers, this Instrument can be monetized on your behalf for 100% funding.

We are ready to close leasing with any interested client in few banking days, if interested do not hesitate to contact me direct. [via Contact Form Below]

Regards

Dimitrij Conradi
Email: dimi.conradi1970@gmail.com
conradi.dimitrij@bk.ru
Skype: conradi.dimitrij@bk.ru

STEPHEN DONALD said...

GENERIC FINANCIAL MANAGEMENT PLC is a British based financial consulting company with years of experience in the

international and local finance market. Be it lease bank guarantee, Stand by letter of credit or any type of

refinancing, talk to our team at GENERIC FINANCIAL MANAGEMENT PLC and certainly we will set your business on the right path

with our sound and quality financial advice and services.

Our bank instrument can be help you fund you projects in Trading, funding project(s) such as Aviation, Agriculture,

Petroleum, Telecommunication, construction of Dams, Bridges, Real Estate and all kind of projects.Having years of

professional, invaluable experience in the banking and finance industry, and having access to dozens of different

prominent trusted and reliable providers, our Financial Services consultants will crawl through hundreds of

products to find one that perfectly matches your needs.

Purchase Instrument of BG/SBLC : 32%+2% Min Face Value cut =5M- 10B EUR/USD

Lease Instrument of BG/SBLC : 4%+2% Min Face Value cut = 5M- 10B EUR/USD


DESCRIPTION OF INSTRUMENTS:

1. Instrument: Bank Guarantee (BG / SBLC) (Appendix A)
2. Total Face Value: Eur 5M MIN and Eur 10B MAX (Ten Billion USD).
3. Issuing Bank: HSBC Bank London, Barclays, Credit Suisse and Deutsche Bank Frankfurt.
4. Age: One Year, One Month
5. Leasing Price: 4% of Face Value plus 2% commission fees to brokers.
6. Delivery: Bank to Bank swift.
7. Payment: MT-103 or MT760
8. Hard Copy: Bonded Courier within 7 banking days.


Name;Stephen Donald

Email;genericfinancialmanagementplc@gmail.com

Skype;genericfianacialmanagementp

Liam Callum said...

GOLDEN CROWN FINANCE PLC is a British based financial consulting company with years of experience in the international and local finance market. Be it lease bank guarantee, Stand by letter of credit or any type of refinancing, talk to our team at GOLDEN CROWN FINANCE PLC and certainly we will set your business on the right path with our sound and quality financial advice and services.

Our bank instrument can be help you fund you projects in Trading, funding project(s) such as Aviation, Agriculture, Petroleum, Telecommunication, construction of Dams, Bridges, Real Estate and all kind of projects.Having years of professional, invaluable experience in the banking and finance industry, and having access to dozens of different prominent trusted and reliable providers, our Financial Services consultants will crawl through hundreds of products to find one that perfectly matches your needs.

Purchase Instrument of BG/SBLC : 32%+2% Min Face Value cut =5M- 10B EUR/USD

Lease Instrument of BG/SBLC : 4%+2% Min Face Value cut = 5M- 10B EUR/USD
DESCRIPTION OF INSTRUMENTS:

1. Instrument: Bank Guarantee (BG / SBLC) (Appendix A)
2. Total Face Value: Eur 5M MIN and Eur 10B MAX (Ten Billion USD).
3. Issuing Bank: HSBC Bank London, Barclays, Credit Suisse and Deutsche Bank Frankfurt.
4. Age: One Year, One Month
5. Leasing Price: 6% of Face Value plus 2% commission fees to brokers.
6. Delivery: Bank to Bank swift.
7. Payment: MT-103 or MT760
8. Hard Copy: Bonded Courier within 7 banking days.

Name; Liam Callum

Email; goldencrownfinanceplc00@gmail.com

Anonymous said...

EAGLE FINANCIAL AND LEASING SERVICES (UK) LIMITED offers a quality financial organization service to many commercial and internal market. At EAGLE FINANCIAL AND LEASING SERVICES (UK) LIMITED, We pride ourselves with a wide range of professional hard working staffs who ensure clients demand are met in a timely manner. Also we ensure that clients requirements are met according to specification. Our project funding is structured to suit the individual needs of our clients as we believe a satisfied client is the best business strategy of all. We are efficient provider of fresh cut Bank Guarantee (BG), Stand by Letter of Credit (SBLC).

Accessing the right financial product or facility at a crucial stage can be the key to business success,you are at liberty to engage our leased facilities into trade programs as well as in signature project(s) such as Aviation Agriculture, Petroleum, Telecommunication, construction of Dams, Bridges and any other turnkey project(s) etc. Our terms and Conditions are reasonable. Contact us today with your inquiries. Kind regards, WHITE, Christopher Simon Director (EAGLE FINANCIAL AND LEASING SERVICES (UK) LIMITED).

Leasing Price : 4%+1%
Buying Price: 32%+2%

White, Christopher Simon
email : advice.eagleflsltd@gmail.com
skype: advice.eagleflsltd

Patrick Mc Brearty said...

I'll like to introduce you to a very profitable business that can help you make some quick cash to offset those bills and get you that vacation money you need just within a week? Well this can only happen if you are willing to trade on the right platform with an expert trader that can follow the trends and read the right signals for you. Care to know more?
We make your no value become a value
with our experience staffs and team, we make every careful move in other to satisfy your need or meet your standard. we are best at what we do and that is to make you worth that value you always wanted. You can visit our site @ https://www.tradecentral.se/ or contact us @ support@tradecentral.se ,
business@tradecentral.se

Our common Plans
Beginner
Duration : 90days
Minimum Amount: 500
Maximum Amount: 1500
Rate: 1.10 %

Standard
Duration : 90days
Minimum Amount: 1550
Maximum Amount: 5000
Rate: 1.20 %

Advance
Duration : 180days
Minimum Amount: 5000
Maximum Amount: 20000
Rate: 2.50 %

Professional
Duration : 180days
Minimum Amount: 20000
Maximum Amount: ∞
Rate: 5.00 %

-Trade Decentral Coin

Keat Cheng said...

We are Ireland based major/Direct providers of Fresh Cut BG, SBLC, POF, MTN, Bonds and CDs and this financial instruments are specifically for lease and sale.We are one of the leading Financial instrument providers with offices all over Europe.
we always deliver on time and precision as Set forth in the agreement. You are at liberty to engage our leased facilities into trade programs, project financing, Credit line enhancement, Corporate Loans (Business Start-up Loans or Business Expansion Loans), Equipment Procurement Loans (Industrial Equipment, Air crafts, Ships, etc.) as well as other financial instruments issued from AAA Rated bank such as HSBC Bank Hong Kong, HSBC Bank London, Deutsche Bank AG Frankfurt, Barclays Bank , Standard Chartered Bank and others on lease at the lowest available rates depending on the face value of the instrument needed, Our Terms and Conditions are reasonable.
DESCRIPTION OF INSTRUMENTS:
1. Instrument: Bank Guarantee (BG)/SBLC (Appendix A)
2. Total Face Value: 10M MIN to 50B MAX USD or Euro
3. Issuing Bank: HSBC, Deutsche Bank Frankfurt, UBS or any Top 25 .
4. Age: One Year, One Day
5. Leasing Price: 4+ 1%
6. Sale Price: 32+2%
7. Delivery by SWIFT .
8. Payment: MT103-23
9. Hard Copy: Bonded Courier within 7 banking days.
If you have need for Corporate loans, International project funding, etc. or if you have a client that requires funding for his project or business, We are also affiliated with lenders who specialize on funding against financial instruments, such as BG, SBLC, POF or MTN, we fund 100% of the face value of the financial instrument.
Inquiries from agents/ brokers/ intermediaries are also welcomed; do get back to us if you are interested in any of our services and for quality service.
Name : Keat Cheng
E-mail : keatcheng2@gmail.com
Skype id :keatcheng2@gmail.com