FASB Exposure Draft Proposes Expanding Proportional Amortization Method

Monday, August 22, 2022 - 9:00am

The Financial Accounting Standards Board (FASB) today released an exposure draft of a proposed accounting standards update that would allow the expanded use of the proportional amortization method to account for investments in tax credit structures. That accounting method is currently only allowed for low-income housing tax credit (LIHTC) investments. The draft proposal would allow reporting entities to use the proportional amortization method for all community development tax credit incentive reporting that meets five conditions. The guidance would also allow a reporting entity to make an accounting policy election on a tax-credit-program-by-tax-credit-program basis, rather than at the reporting entity level or for individual investments. The FASB will accept comments on the exposure draft through Oct. 6. The GAAP Working Group is reviewing the exposure draft and will submit comments on the proposal. If you would like to join the GAAP Working Group and be part of the process, please contact Brad Elphick.

The proposal will also be discussed at upcoming Novogradac conferences.