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FASB issues ASU on derivative contracts designated in a hedge accounting relationship

  • FASB document Image

Mar 10, 2016

The FASB has issued Accounting Standards Update (ASU) No. 2016-05, “Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships.”

The ASU clarifies that “a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815 does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria (including those in paragraphs 815-20-35-14 through 35-18) continue to be met.”

For public busi­ness en­ti­ties, the amendments in the ASU are effective for annual re­port­ing periods, and interim periods therein, be­gin­ning after De­cem­ber 15, 2016. The ef­fec­tive date for all other en­ti­ties is one year later than this (i.e., De­cem­ber 15, 2017). Early adop­tion is per­mit­ted. Entities have the option of applying the amendments in the ASU on either a prospective basis or a modified retrospective basis.

For more in­for­ma­tion, see Deloitte's related Heads Up as well as the ASU on the FASB’s Web site.

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