Fair Value Measurements Revisited Herschel Mann Texas Tech University

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Fair Value MeasurementsRevisitedHerschel
MannTexas Tech University
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• FASB Statement 157
• Fair Value Measurements

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FASB Statement 157

• Guidance on determining fair value evolved
  piecemeal and is inconsistent
• SFAS 157
• Defines fair value
• Establishes a framework for measuring fair value
• Expands disclosure requirements about fair value
• SFAS 157 applies under other accounting
  pronouncements that require or permit fair value
  measurements it does not require any new fair
  value measurements.

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FASB Statement 157

• Selected scope exceptions
• SFAS 123R share-based payment transactions
• ARB 43, Chapter 4, Inventory Pricing
• Does not eliminate the practicability exceptions
  to fair value measurements in accounting
  pronouncements within the scope of SFAS 157
• APB 29
• SFAS 87, 106, 107, 140, 141, 143, 146, 153
• FIN 45, 47

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FASB Statement 157

• Fair value is the price that would be received to
  sell an asset or paid to transfer a liability in
  an orderly transaction between market
  participants at the measurement date
• A fair value measurement is for a particular
  asset or liability
• A fair value measurement assumes that the
  transaction to sell the asset or transfer the
  liability occurs in the principal market or, in
  the absence of a principal market, the most
  advantageous market
• A fair value measurement assumes the highest and
  best use of the asset by market participants

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FASB Statement 157

• Valuation techniques used to measure fair value
  should maximize the use of observable inputs and
  minimize the use of unobservable inputs
• Fair value hierarchy
• Level 1 inputs quoted prices in active markets
  for identical assets or liabilities
• Level 2 inputs those other than quoted prices
  that are observable for the asset or liability
• Level 3 inputs unobservable inputs

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FASB Statement 157

• SFAS 157 is effective for financial statements
  issued fiscal years beginning after November 15,
  2007.
• SFAS 157 must be applied prospectively.
• FSP 157-2 delays the effective date of SFAS 157
  to fiscal years beginning after November 15, 2008
  for nonfinancial assets and nonfinancial
  liabilities, except for items that are recognized
  or disclosed at fair value in the financial
  statements on a recurring basis (at least
  annually).

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• FASB Statement 159
• The Fair Value Option for Financial
• Assets and Financial Liabilities

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FASB Statement 159

• SFAS 159 allows entities to choose to measure
  eligible items at fair value (the fair value
  option)
• The entity must report unrealized gains and
  losses on these opted items in earnings
• The decision to elect the fair value option is
• Applied instrument by instrument
• Irrevocable (unless a new election date occurs)
• Applied only to an entire instrument and not to
  only specified risks, cash flows, or portions of
  that instrument

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FASB Statement 159

• Entities may elect the fair value option for the
  following items
• A recognized financial asset and financial
  liability
• A firm commitment that would otherwise not be
  recognized at inception and that involves only
  financial instruments
• A written loan commitment
• The rights and obligations under an insurance
  contract that is not a financial instrument but
  whose terms permit the insurer to settle by
  paying a third party to provide those goods or
  services

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FASB Statement 159

• The rights and obligations under a warranty that
  is not a financial instrument but whose terms
  permit the warrantor to settle by paying a third
  party to provide those goods or services
• A host financial instrument resulting from the
  separation of an embedded nonfinancial derivative
  instrument from a nonfinancial hybrid instrument
  under paragraph 12 of SFAS 133 (example is an
  instrument in which the value of the bifurcated
  embedded derivative is payable in cash, services,
  or merchandise but the debt host is payable only
  in cash)

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FASB Statement 159

• The following recognized financial assets and
  financial liabilities are not eligible items
• An investment in a subsidiary that the entity is
  required to consolidate
• An interest in a variable interest entity that an
  entity is required to consolidate
• Employers and plans obligations for pension
  benefits, other postretirement benefits,
  postemployment benefits, employee stock option
  and stock purchase plans and other forms of
  deferred compensation arrangements
• Financial assets and financial liabilities
  recognized under leases
• Deposit liabilities, withdrawable on demand, of
  banks, savings and loan associations, credit
  unions, and other similar depository institutions
• Financial instruments that are, in whole or in
  part, classified by the issuer as a component of
  shareholders equity

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FASB Statement 159

• The following recognized financial assets and
  financial liabilities are not eligible items
• An investment in a subsidiary that the entity is
  required to consolidate
• An interest in a variable interest entity that an
  entity is required to consolidate
• Employers and plans obligations for pension
  benefits, other postretirement benefits,
  postemployment benefits, employee stock option
  and stock purchase plans and other forms of
  deferred compensation arrangements
• Financial assets and financial liabilities
  recognized under leases
• Deposit liabilities, withdrawable on demand, of
  banks, savings and loan associations, credit
  unions, and other similar depository institutions
• Financial instruments that are, in whole or in
  part, classified by the issuer as a component of
  shareholders equity

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FASB Statement 159

• An entity may decide whether to elect the fair
  value option for each eligible item on its
  election date, which is the date that one of the
  following occurs
• The entity first recognizes the eligible item
• The entity enters into an eligible firm
  commitment
• Financial assets that have been reported at fair
  value with unrealized gains and losses included
  in earnings because of specialized principles
  cease to qualify for that specialized accounting
• The accounting treatment for an investment in
  another entity changes because the investment
  becomes subject to the equity method or the
  investor ceases to consolidate a subsidiary or a
  variable interest entity but retains an interest

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FASB Statement 159

• An event that requires an eligible item to be
  measured at fair value at the time of the event
  but does not require fair value measurement at
  each reporting date after that (excluding the
  recognition of impairment)

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FASB Statement 159

• Examples of events that require remeasurement of
  eligible items at fair value, initial recognition
  of eligible items, or both, and thereby create an
  election date for the fair value option are
• Business combinations
• Consolidation or deconsolidation of a subsidiary
  or variable interest entity
• Significant modifications of debt

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FASB Statement 159

• The fair value option may be elected for a single
  eligible item without electing it for other
  identical items, with the following four
  exceptions
• If multiple advances are made to one borrower
  pursuant to a single contract and the individual
  advances lose their identify and become part of a
  larger loan balance, the fair value option should
  be applied only to the larger balance and not to
  each advance individually
• If the fair value option is applied to an
  investment that would otherwise be accounted for
  under the equity method, it must be applied to
  all of the investors financial interests in that
  entity

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FASB Statement 159

• If the fair value option is applied to an
  eligible insurance or reinsurance contract, it
  should be applied to all claims and obligations
  under that contract
• If the fair value option is elected for an
  insurance contract for which integrated or
  nonintegrated contract features or coverages are
  issued, the fair value option must be applied to
  those other features or coverages

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FASB Statement 159

• Assets and liabilities reported at fair value
  under SFAS 159 must be reported separately from
  the carrying amounts of similar assets and
  liabilities measured using another measurement
  attribute
• Present the aggregate of fair value and
  non-fair-value amounts in the same line item in
  the balance sheet and parenthetically disclose
  the amount measured at fair value included in the
  aggregate amount
• Present two separate line items to display the
  fair value and non-fair-value carrying amounts
• Cash receipts and payments related to items
  measured at fair value should be classified
  according to their nature in statements of cash
  flows

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FASB Statement 159

• SFAS 159 became effective as of the beginning of
  each reporting entitys first fiscal year that
  begins after November 15, 2007.

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Emergency Economic Stabilization Act of 2008

• Emergency Economic Stabilization Act of 2008
  (EESA) signed into law on October 3, 2008
• Section 133 mandated that the SEC conduct a study
  on mark-to-market accounting standards as
  provided by SFAS 157 (in consultation with the
  Federal Reserve and the Secretary of the
  Treasury)
• EESA mandated that six key issues be addressed

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Six Key Issues Addressed in Response to EESA

• Effects of fair value accounting standards on
  financial institutions balance sheets
• Impact of fair value accounting on bank failures
  in 2008
• Impact of fair value accounting on the quality of
  financial information to investors
• Process used by the FASB in developing accounting
  standards
• Alternatives to fair value accounting standards
• Advisability and feasibility of modifications to
  fair value accounting standards

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Recommendations in SEC Response

1. SFAS 157 should be improved, but not suspended
2. Existing fair value and mark-to-market
   requirements should not be suspended
3. Additional measures should be taken to improve
   the application and practice related to existing
   fair value requirements (particularly as they
   relate to both Level 2 and Level 3 estimates
4. The accounting for financial asset impairments
   should be addressed

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Recommendations in SEC Response

1. Implement further guidance to foster the use of
   sound judgment
2. Accounting standards should continue to be
   established to meet the needs of investors
3. Additional formal measures to address the
   operation of existing accounting standards in
   practice should be established
4. Address the need to simplify the accounting for
   investments in financial assets

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FASB Staff Position (FSP) FAS 157-1(Issued
Before SEC Response)

• SFAS 157 does not apply under SFAS 13, Accounting
  for Leases, and other accounting pronouncements
  that address fair value measurements for purposes
  of lease classification or measurement under SFAS
  13
• This scope exception does not apply to assets
  acquired and liabilities assumed in a business
  combination that are required to be measured at
  fair value under SFAS 141 or SFAS 141R,
  regardless of whether those assets and
  liabilities are related to leases

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FASB Staff Position (FSP) FAS 157-2(Issued
Before SEC Response)

• Defers the effective date of SFAS 157 to fiscal
  years beginning after November 15, 2008 for
  nonfinancial assets and nonfinancial liabilities
• except for items that are recognized or disclosed
  at fair value in an entitys financial statements
  on a recurring basis (at least annually)
• Nonfinancial assets and nonfinancial liabilities
  include all assets and liabilities other than
  financial assets and financial liabilities (per
  SFAS 159, The Fair Value Option for Financial
  Assets and Financial Liabilities)

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FASB Staff Position (FSP) FAS 157-3(Issued
Before SEC Response)

• Clarifies the application of SFAS 157 in a market
  that is not active
• Added an illustrative example to SFAS 157
• Example relates to an entity that invested in a
  AA-rated tranche of a collateralized debt
  obligation security, with the underlying
  collateral for the collateralized debt obligation
  security being unguaranteed nonconforming
  residential mortgage loans
• This FSP became effective upon its issuance

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FASB Staff Position (FSP) FAS 157-4(Issued After
SEC Response)

• Provides guidance for estimating fair value in
  accordance with SFAS 157 when the volume and
  level of activity for the asset or liability have
  been significantly decreased
• Provides guidance on identifying circumstances
  that indicate a transaction is not orderly
• Applies to all assets and liabilities within the
  scope of accounting pronouncements that require
  or permit fair value measurements, except for the
  exemptions identified in SFAS 157 (e.g.,
  share-based payments)

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FASB Staff Position (FSP) FAS 157-4(Selected
Items)

• This FSP does not change the requirements in
  paragraphs 24-27 of SFAS 157, which provides
  guidance on the use of Level 1 inputs
• Thus, it does not apply to quoted prices for an
  identical asset or liability in an active market
  (Level 1 input)
• For example, although the volume and level of
  activity for an asset or liability may
  significantly decrease, transactions for the
  asset or liability may still occur with
  sufficient frequency and volume to provide
  pricing information on an ongoing basis

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FASB Staff Position (FSP) FAS 157-4 (Par. 12)

• An entity must evaluate the following factors to
  determine whether there has been a significant
  decrease in the volume and level of activity for
  the asset or liability when compared with normal
  market activity for the asset or liability (or
  similar assets or liabilities)
• There are few recent transactions
• Price quotations are not based on current
  information
• Price quotations vary substantially, either over
  time or among market makers
• Indexes that previously were highly correlated
  with the fair values of the asset or liability
  are demonstrably uncorrelated with recent
  indications of fair value for that asset or
  liability

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FASB Staff Position (FSP) FAS 157-4 (Par 12)

• There is a significant increase in implied
  liquidity risk premiums, yields, or performance
  indicators for observed transactions or quoted
  prices when compared with the entitys estimate
  of expected future cash flows, considering all
  available market data about credit and other
  nonperformance risk for the asset or liability
• There is a wide bid-ask spread or significant
  increase in the bid-ask spread
• There is a significant decline or absence of a
  market for new issuances (that is, a primary
  market) for the asset or liability or similar
  assets or liabilities
• Little information is released publicly (e.g., a
  principal to principal market)

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FASB Staff Position (FSP) FAS 157-4 (Par. 13)

• If the entity concludes there has been a
  significant decrease in the volume and level of
  activity for the asset or liability in relation
  to normal market activity for the asset or
  liability (or similar assets or liabilities),
  transactions or quoted prices may not be
  determinative of fair value (for example, there
  may be increased instances of transactions that
  are not orderly).
• In that case, further analysis of the
  transactions or quoted prices is needed, and a
  significant adjustment to the transactions or
  quoted prices is needed, and a significant
  adjustment to the transactions or quoted prices
  may be necessary.

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FASB Staff Position (FSP) FAS 157-4 (Par. 14)

• SFAS 157 does not prescribe a methodology for
  making significant adjustments to transactions or
  quoted prices when estimating fair value.
• If there has been a significant decrease in the
  volume and level of activity for the asset or
  liability, a change in valuation technique or the
  use of multiple valuation techniques may be
  appropriate.
• When weighting indications of fair value
  resulting from the use of multiple valuation
  techniques, a reporting entity shall consider the
  reasonableness of the range of fair value
  estimates.
• The objective is to determine the point within
  that range that is most representative of fair
  value under current market conditions.
• A wide range of fair value estimates may be an
  indication that further analysis is needed.

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FASB Staff Position (FSP) FAS 157-4 (Par. 15)

• Even in circumstances where there has been a
  significant decrease in the volume and level of
  activity for the asset or liability and
  regardless of the valuation technique(s) used,
  the objective of a fair value measurement remains
  the same.
• Fair value is the price that would be received to
  sell an asset or paid to transfer a liability in
  an orderly transaction (that is, not a forced
  liquidation or distressed sale) between market
  participants at the measurement date under
  current market conditions.

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FASB Staff Position (FSP) FAS 157-4 (Par. 15-16)

• Determining the price at which willing market
  participants would transact at the measurement
  date under current market conditions if there has
  been a significant decrease in the volume and
  level of activity for the asset or liability
  depends on the facts and circumstances and
  requires the use of significant judgment.
• However, a reporting entitys intention to hold
  the asset or liability is not relevant in
  estimating fair value.
• Fair value is a market-based measurement, not an
  entity-specific measurement.
• A reporting entity shall evaluate the
  circumstances to determine whether the
  transaction is orderly based on the weight of
  evidence.

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FASB Staff Position (FSP) FAS 157-4 (Par. 17)

• The determination of whether a transaction is
  orderly (or not orderly) is more difficult if
  there has been a significant decrease in the
  volume and level of activity for the asset or
  liability.
• Accordingly, a reporting entity shall consider
  the following guidance
• If the weight of the evidence indicates the
  transaction is not orderly, a reporting entity
  shall place little, if any, weight (compared with
  other indications of fair value) on that
  transaction price when estimating fair value or
  market risk premiums.
• If the weight of the evidence indicates the
  transaction is orderly, a reporting entity shall
  consider that transaction price when estimating
  fair value or market risk premiums. The amount
  of weight placed on that transaction price when
  compared with other indications of fair value
  will depend on the facts and circumstances such
  as the volume of the transaction, the
  comparability of the transaction to the asset or
  liability being measured at fair value, and the
  proximity of the transaction to the measurement
  date.

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FASB Staff Position (FSP) FAS 157-4 (Par. 17)

• If a reporting entity does not have sufficient
  information to conclude that the transaction is
  orderly or that the transaction is not orderly,
  it shall consider that transaction price when
  estimating fair value or market risk premiums.
  However, that transaction price may not be
  determinative of fair value (that is, that
  transaction price may not be the sole or primary
  basis for estimating fair value or market risk
  premiums.) A reporting entity shall place less
  weight on transactions on which a reporting
  entity does not have sufficient information to
  conclude whether the transaction is orderly when
  compared with other transactions that are known
  to be orderly.
• In its determinations, a reporting entity need
  not undertake all possible efforts, but shall not
  ignore information that is available without
  undue cost and effort.
• A reporting entity would be expected to have
  sufficient information to conclude whether a
  transaction is orderly when it is party to the
  transaction.

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FASB Staff Position (FSP) FAS 157-4

• Effective Date and Transition
• FSP FAS157-4 is effective for interim and annual
  reporting periods ending after June 15, 2009, and
  must be applied prospectively.
• Early adoption is permitted for periods ending
  after March 15, 2009.
• If an entity elects to adopt early either FSP FAS
  115-2 and FAS 124-2 or FSP FAS 107-1 and APB
  28-1, it also is required to adopt early this
  FSP.

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FSP FAS 115-1and FAS 124-1

• This FSP
• addresses the determination as to when an
  investment is considered impaired
• whether that impairment is other than temporary
• the measurement of an impairment loss
• Issued November 3, 2005

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FSP FAS 115-1and FAS 124-1Step 1 Determine
Whether an Investment is Impaired

• Impairment must be assessed at the individual
  security level
• Individual security level means the level and
  method of aggregation used by the reporting
  entity to measure realized and unrealized gains
  and losses on its debt and equity securities.
• An investment is impaired if its fair value is
  less than its cost
• Cost includes adjustments made to the cost basis
  of an investment for accretion, amortization,
  previous other-than-temporary impairments, and
  hedging.
• Except as otherwise provided in this FSP, an
  investor must assess whether an investment is
  impaired in each reporting period.

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FSP FAS 115-1and FAS 124-1Step 1 Determine
Whether an Investment is Impaired

• An investor may not combine separate contracts (a
  debt security and a guarantee or other credit
  enhancement) for purposes of determining whether
  a debt security is impaired or can contractually
  be prepaid or otherwise settled in such a way
  that the investor would not recover substantially
  all of its cost.
• For investments other than cost-method
  investments, if the fair value of the investment
  is less than its cost, proceed to Step 2 (i.e.,
  evaluate whether an impairment is other than
  temporary)

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FSP FAS 115-1and FAS 124-1Step 1 Determine
Whether an Investment is Impaired

• Since the fair value of cost-method investments
  is not readily determinable, the evaluation of
  whether an investment is impaired should be
  determined as follows
• If an investor has estimated the fair value of a
  cost-method investment, that estimate should be
  used to determine if the investment is impaired
  for the reporting periods in which the investor
  estimates fair value.
• If the investor has not estimated the fair value
  of a cost-method investment, the investor must
  evaluate whether an event or change in
  circumstances has occurred in that period that
  may have a significant adverse effect on the fair
  value of the investment (an impairment
  indicator).
• If an impairment indicator is present, the
  investor must estimate the fair value of the
  investment.

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FSP FAS 115-1and FAS 124-1Step 1 Determine
Whether an Investment is Impaired

• Examples of impairment indicators
• A significant deterioration in the earnings
  performance, credit rating, asset quality, or
  business prospects of the investee
• A significant adverse change in the regulatory,
  econo9mic, or technological environment of the
  investee
• A significant adverse change in the general
  market condition of either the geographic area or
  the industry in which the investee operates
• A bona fide offer to purchase (whether solicited
  or unsolicited), an offer by the investee to
  sell, or a completed auction process for the same
  or similar security for an amount less than the
  cost of the investment
• Factors that raise significant concerns about the
  investees ability to continue as a going
  concern, such as negative cash flows from
  operations, working capital deficiencies, or
  noncompliance with statutory capital requirements
  of debt covenants.

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FSP FAS 115-1and FAS 124-1Step 2 Evaluate
Whether an Impairment Lossis Other Than Temporary

• If in Step 1, when the fair value of the
  investment is less than its cost at the balance
  sheet date for which impairment is assessed, the
  impairment is either temporary or other than
  temporary.
• An investor should apply other guidance that is
  pertinent to the determination of whether an
  impairment is other than temporary (such as
  paragraph 16 of SFAS 115).

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FSP FAS 115-1and FAS 124-1Step 3 If the
Impairment is Other Than Temporary, Recognize an
Impairment Loss Equal to the Difference between
the Investments Cost and Its Fair Value

• If the impairment loss is other than temporary,
  an impairment loss should be recognized in
  earnings equal to the entire difference between
  the investors cost and
  its fair value at
  the balance sheet date of the reporting period in
  which the assessment is made.
• The fair value of the investment would then
  become the new cost basis of the investment and
  should not be adjusted for subsequent recoveries
  in fair value.
• In periods subsequent to the recognition of an
  other-than-temporary loss for debt securities, an
  investor should account for the
  other-than-temporarily impaired debt security as
  if the debt security had been purchased at the
  measurement date of the other-than-temporary
  impairment.

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FSP FAS 115-1and FAS 124-1

• Effective Date and Transition
• The guidance in this FSP must be applied to
  reporting periods beginning after December 15,
  2005.

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FSP FAS 115-2 and FAS 124-2

• Issued April 9, 2009
• The recognition guidance in this FSP applies to
  debt securities classified as available-for-sale
  and held-to-maturity that are subject to other
  than-temporary impairment guidance within
• SFAS 115
• FSP FAS 115-1 and FAS 124-1
• EITF Issue 99-20, as amended by FSP EITF 99-20-1
• AICPA Statement of Position 03-3

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FSP FAS 115-2 and FAS 124-2Evaluating Whether an
Impairment of a Debt Security Is Other Than
Temporary

• If the fair value of a debt security is less than
  its amortized cost basis at the balance sheet
  date, an entity shall assess whether the
  impairment is other than temporary.
• If an entity has decided to sell the debt
  security, an other-than-temporary impairment
  shall be considered to have occurred.
• If an entity does not intend to sell the debt
  security, the entity should consider available
  evidence to assess whether it more likely than
  not will be required to sell the security before
  the recovery of the amortized cost basis. If so,
  an other-than-temporary impairment shall be
  considered to have occurred.

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FSP FAS 115-2 and FAS 124-2Evaluating Whether an
Impairment of a Debt Security Is Other Than
Temporary

• If the entity does not expect to recover the
  entire amortized cost basis, the entity would be
  unable to assert that it will recover its
  amortized cost basis even if it does not intend
  to sell the security. Therefore, an
  other-than-temporary impairment shall be
  considered to have occurred.
• In assessing whether the entire cost basis of the
  security will be recovered, an entity must
  compare the present value of cash flows expected
  to be collected from the security with the
  amortized cost basis of the security.
• If present value of cash flows expected to be
  collected is less than the amortized cost basis
  of the security, the entire amortized cost basis
  of the security will not be recovered (that is, a
  credit loss exists), and an other-than-temporary
  impairment shall be considered to have occurred.

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FSP FAS 115-2 and FAS 124-2Determination of the
Amount of an Other-Than Temporary Impairment
Recognized in Earnings and OCI

• When an other-than-temporary impairment loss has
  occurred, the amount that should be recognized in
  earnings depends on whether an entity intends to
  sell the security or more likely than not will be
  required to sell the security before recovery of
  its amortized cost basis less any current-period
  credit loss.
• If it intends to sell the security or more likely
  than not will be required to sell it before
  recovery of its amortized cost basis less any
  current-period credit loss, the
  other-than-temporary impairment must be
  recognized in earnings equal to the entire
  difference between the investments amortized
  cost basis and its fair value at the balance
  sheet date.
• If an entity does not intend to sell the security
  and it is not more likely than not that the
  entity to be required to sell the security before
  recovery of its amortized cost basis less any
  current-period credit loss, the
  other-than-temporary shall be separated into (a)
  the amount representing the credit loss and (b)
  the amount related to all other factors.

51
FSP FAS 115-2 and FAS 124-2Determination of the
Amount of an Other-Than Temporary Impairment
Recognized in Earnings and OCI

• The amount of the total other-than-temporary
  impairment related to the credit loss must be
  recognized in earnings. The amount of the total
  other-than-temporary impairment related to other
  factors must be recognized in OCI, net of
  applicable taxes.
• The previous amortized cost less the
  other-than-temporary impairment recognized in
  earnings shall become the new amortized cost
  basis of the investment.
• The new amortized cost basis shall not be
  adjusted for subsequent recoveries in fair value.
• However, the amortized cost basis should be
  adjusted for accretion and amortization as
  prescribed in this FSP.

52
FSP FAS 115-2 and FAS 124-2Accounting for Debt
Securities after an Other-Than Temporary
Impairment

• An entity shall account for the
  other-than-temporarily-impaired debt security as
  if the debt security had been purchased on the
  measurement date of the other-than-temporary
  impairment at an amortized cost basis equal to
  the previous amortized cost basis less the
  other-than-temporary impairment recognized in
  earnings.
• Debt securities classified as available-for-sale
• Subsequent increases and decreases (if not an
  additional other-than-temporary impairment) in
  the fair value of the available-for-sale
  securities shall be included in OCI.
• Debt securities classified as held-to-maturity
• The other-than-temporary impairment recognized in
  OCI shall be accreted from OCI to the amortized
  cost of the debt security over the remaining life
  of the debt security in a prospective manner on
  the basis of the amount and timing of future
  estimated cash flows.
• That accretion shall increase the carrying value
  of the security and shall continue until the
  security is sold, the security matures, or there
  is an additional other-than-temporary impairment
  that is recognized in earnings.

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FSP FAS 115-2 and FAS 124-2Presentation

• In periods in which an entity has an
  other-than-temporary impairment, the entity must
  present the total other-than-temporary impairment
  in the statement of earnings with an offset for
  the amount that is recognized in OCI.
• An entity also must separately present, in the
  financial statement where the components of
  accumulated OCI are reported, amounts recognized
  therein related to held-to-maturity and
  available-for-sale debt securities for which a
  portion of an other-than-temporary impairment has
  been recognized in earnings.

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FSP FAS 115-2 and FAS 124-2Effective Date and
Transition

• This FSP is effective for interim and annual
  reporting periods ending after June 15, 2009,
  with early adoption permitted for periods ending
  after March 15, 2009. Earlier adoption is
  prohibited.

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