The Financial Accounting Standards Board voted 4-3 Wednesday to give corporations a brief holiday from its controversial market value accounting rules.
The standards, which were opposed vigorously by banks and thrifts before going into effect in January 1994, require companies that hold debt securities to classify them as "trading," "available for sale," or "held to maturity."
When Wednesday's decision is published - probably in mid-November - banks, thrifts, and other corporations will be able to move securities from category to category without penalty until Dec. 31.
The categories are important because only held-to-maturity securities can be valued at cost - which is how banks and thrifts used to value most of their portfolios. Securities in the other categories must regularly be marked to market.
Those who sell securities designated as held-to-maturity before they mature risk being forced by auditors or the Securities and Exchange Commission to mark the rest of their held-to-maturity portfolio to market.
Accounting board project manager Robert C. Wilkins said the board wanted to let corporations reassess their 1994 classification decisions in light of subsequent events. For banks and thrifts, the most important such event was the banking agencies' decision to ignore the board's new guidelines for calculating regulatory capital.