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FASB makes targeted improvements to the accounting for long-duration insurance contracts

  • FASB document Image

Aug 15, 2018

The FASB has issued Accounting Standards Update (ASU) No. 2018-12, “Financial Services — Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts.”

As noted in the ASU, the new guidance is intended to:

1. Improve the timeliness of recognizing changes in the liability for future policy benefits and modify the rate used to discount future cash flows

2. Simplify and improve the accounting for certain market-based options or guarantees associated with deposit (or account balance) contracts

3. Simplify the amortization of deferred acquisition costs

4. Improve the effectiveness of the required disclosures.

For public business entities, the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early application is permitted.

For more information, see the following resources on the FASB’s Web site:

On August 20, 2018, the FASB issued for comment Proposed Taxonomy Improvements for Accounting Standards Update — Financial Services — Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. Comments on the proposed taxonomy improvements are due by October 16, 2018.

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