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FASB proposes narrow-scope amendments to guidance on financial instruments

  • FASB document Image

Nov 20, 2018

The FASB has issued a proposed Accounting Standards Update (ASU), “Codification Improvements — Financial Instruments,” which would clarify and improve guidance related to credit losses, hedging, and recognition and measurement.

The proposed ASU would make improvements to the following aspects of financial instruments:

  • Accrued interest.
  • Transfers between classifications or categories for loans and debt securities.
  • Conforming amendment to ASC 310-40 and ASC 323-10.
  • Clarification that reinsurance recoverables are within the scope of ASC 326-20.
  • Projections of interest-rate environments for variable-rate financial instruments.
  • Consideration of prepayments in the determination of the effective interest rate.
  • Consideration of estimated selling costs when foreclosure is probable.
  • Partial-term fair value hedges of interest rate risk.
  • Amortization of fair value hedge basis adjustments.
  • Disclosure of fair value hedge basis adjustments.
  • Consideration of the hedged contractually specified interest rate under the hypothetical derivative method.
  • Scope for not-for-profit entities.
  • Hedge accounting provisions applicable to certain private companies and not-for-profit entities.
  • Application of a first-payments-received cash flow hedging technique to overall cash flows related to a group of variable interest payments.
  • Update to ASU 2017-12 transition guidance.
  • Scope clarifications for ASC 320-10 and 321-10.
  • Fair value disclosures related to held-to-maturity debt securities.
  • Applicability of ASC 820 to the measurement alternative.
  • Remeasurement of equity securities at historical exchange rates.
  • Vintage disclosures — line-of-credit arrangements converted to term loans.
  • Contractual extensions and renewals.

Comments on the proposed ASU are due by December 19, 2018.

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

On November 27, 2018, the FASB issued for comment Proposed Accounting Standards Update, Codification Improvements — Financial Instruments. Comments on the proposed taxonomy improvements are due by December 26, 2018.

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