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Roundtables Planned for FASB Hedge Accounting Proposal

Two roundtable sessions are scheduled for Friday, December 2, regarding the Financial Accounting Standards Board’s (“FASB”) proposed Accounting Standards Update, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. Hosted at the FASB offices in Norwalk, Connecticut, the roundtables will allow stakeholders who submitted a comment letter to discuss their feedback on the proposal. The roundtable sessions are scheduled as follows: Session 1: 9:00 a.m. – 12:00 p.m. ET Session 2: 1:00 p.m. – 4:00 p.m. ET Registration to participate in one of the roundtables is available at FASB.org. The deadline to register and submit a comment letter is Friday, November 4. Nonparticipating observers must register to attend by. Read More.

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Changes Proposed to Hedge Accounting Guidance

An Exposure Draft has been issued to improve the guidance in relation to hedging activities. The proposed Accounting Standards Update (“ASU”), Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, includes the Financial Accounting Standards Board’s (“FASB”) recommendations to help entities disclose the economic results of their risk management activities. The proposed changes also aim to simplify hedge accounting guidance while maintaining the value of the financial reporting information presented. Comments on the proposal are due Tuesday, November 22. More on the proposed changes to hedge accounting guidance is available in the FASB news release.

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FASB Updates Guidance for Assessing Put and Call Options

Impacting companies that invest in or issue debt instruments (or hybrid financial instruments with a debt host) with embedded call (put) options, the Financial Accounting Standards Board (“FASB”) has issued Accounting Standards Update No. 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments. The Update clarifies the steps companies are required to take when assessing whether or not the economic characteristics and risks of call (put) options are clearly and closely related to the economic characteristics and risks of their debt hosts. When a call (put) option is contingently exercisable, a company does not have. Read More.

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FASB Clarifies Guidance for Derivative Instrument Accounting

Accounting Standards Update (ASU) No. 2016-05, Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships, has been issued by the Financial Accounting Standards Board (“FASB”). The amendments clarify the guidance in Topic 815. Specifically, ASU No. 2016-05 clarifies that a change in the counterparty to a derivative instrument designated as the hedging instrument does not require dedesignation of the hedging relationship so long as all other hedge accounting criteria. The amendments in ASU No. 2016-05 are effective for public companies’ financial statements issued for fiscal years, and interim periods within those years, starting after December. Read More.

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Private Company Accounting Alternatives Removed

Impacting the use of private company accounting alternatives, the Financial Accounting Standards Board has issued Accounting Standards Update (ASU) No. 2016-03 . The ASU eliminates the effective dates for the following alternatives: ASU No. 2014-02, Intangibles—Goodwill and Other (Topic 350). ASU No. 2014-03, Derivatives and Hedging (Topic 815). ASU No. 2014-07, Consolidation (Topic 810): Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements. ASU No. 2014-18, Business Combinations (Topic 805): Accounting for Identifiable Intangible Assets in a Business Combination. ASU No. 2016-03 also waives the preferability assessment for the first time a private entity applies a private company accounting alternative. The amendments in ASU No. 2016-03 are effective immediately.

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U.S. GAAP Update to Offer Accounting Alternative for Private Companies

Last month, the Financial Accounting Standard Board (“FASB”) approved a proposal that would offer private companies an easier method to adopt special accounting alternatives from U.S. GAAP. Scheduled to be published in early 2016, the proposal is in response to the Private Company Council’s (“PCC”) calls for accounting changes. In September, the FASB issued Proposed Accounting Standards Update No. PCC-15-01, Intangibles—Goodwill and Other (Topic 350): Business Combinations (Topic 805): Consolidation (Topic 810): Derivatives and Hedging (Topic 815): Effective Date and Transition Guidance — a Proposal of the Private Company Council. The proposal eliminates the effective dates for the following accounting. Read More.

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