U.S. accounting rulemakers on Thursday agreed to make adjustments to a proposal to change mark-to-market accounting rules concerning when transactions would be considered distressed.
The Financial Accounting Standards Board said its proposed changes would take effect in the second quarter for most U.S. companies, but early adoption would be allowed for most companies' first quarter.
The board, at a meeting in Norwalk, Connecticut, said it would remove a presumption in its original proposal that would have allowed all transactions in an inactive market to be considered distressed unless proven otherwise. It said that particular language could have had unintended consequences.
FASB also said the objective of mark-to-market, or fair value accounting, in inactive markets would be to determine what an asset could fetch in an orderly transaction between market participants. It said an orderly transaction would not include distressed transactions or fire-sales.
The board is continuing discussions on the rule and another rule on other-than-temporary impairment issues that affect when writedowns have to be taken on financial assets that have suffered a decline in value.
(Reporting by Emily Chasan and Rachelle Younglai; editing by John Wallace)