Accounting board changes asset rules

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WASHINGTON (AP) – The board that sets U.S. accounting standards on Thursday gave companies more leeway when valuing assets and reporting losses, providing a potential boost to battered banks’ balance sheets.The independent Financial Accounting Standards Board voted to adopt new guidelines under the so-called mark-to-market accounting rules, which require companies to value assets at prices reflecting current market conditions. The board was meeting at its headquarters in Norwalk, Conn.

The changes will allow the assets to be valued at what they would go for in an “orderly” sale, as opposed to a forced or distressed sale. In addition, new guidelines will allow banks to avoid reporting some losses on securities on their financial statements. The change in how companies record impaired assets they don’t currently plan to sell allows them to split off credit losses from non-credit losses due to other factors such as fluctuating interest rates. The latter will not have to be counted toward net income or loss.

The new guidelines will apply to the second quarter that began this month.