The IASB and the FASB discussed feedback from outreach on the operational feasibility of the impairment model tentatively supported by the boards during the 8 December 2010 joint meeting. That model as developed initially would have required entities to recognise the higher of a 12-month expected loss estimate and a time-proportionate allowance balance calculated as the entity's allowance for losses for the 'good' book. This meant that the 12-month expected loss estimate would establish a floor for the 'good' book allowance. The model also required recognising impairment in the 'bad' book to cover fully lifetime expected losses. The boards asked the staff to undertake some outreach to investigate further the operationality of the model and to consider further whether the floor should be a 12-month expected loss estimate or a loss estimate based on the amount of credit losses expected to occur within the foreseeable future.
In the light of this outreach, the boards tentatively decided to change the floor calculation in the model from a 12-month expected loss estimate to a loss estimate based on the amount of credit losses expected to occur within a period that can be reliably estimated as being no less than 12 months. The boards agreed to publish a supplemental document seeking input from constituents on this model. The boards expect publication of the document in January 2011.