The US Financial Accounting Standards Board (FASB) has relented on its previous plans to require companies to report all of their financial instruments at fair value. Yesterday, the FASB tentatively decided to permit accounting for financial assets for which an entity's business strategy is managing the assets for the collection of contractual cash flows through a lending or customer financing activity at amortized cost. This reversal from the original idea of requiring accounting for most types of financial instruments, including bank loans, at fair value brings the FASB closer to the mixed measurement approach adopted by the International Accounting Standards Board (IASB) under which some assets would be reported at fair value and others at amortized cost.
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