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FASB expands the list of benchmark interest rates for hedge accounting

  • FASB document Image

Oct 25, 2018

The FASB has issued Accounting Standards Update (ASU) No. 2018-16, “Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes.”

The ASU amends ASC 815, Derivatives and Hedging, to add the OIS rate based on SOFR as a fifth U.S. benchmark interest rate. The other four eligible benchmark interest rates under ASC 815 are:

  • Interest rates on direct Treasury obligations of the U.S. government.
  • The London Interbank Offered Rate swap rate.
  • The Overnight Index Swap Rate based on the Fed Funds Effective Rate.
  • The Securities Industry and Financial Markets Association municipal swap rate.

The ASU is effective concurrently with ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities.

For more information, see the press release and ASU on the FASB’s Web site.

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