Article

FASB Issues Amendments to Financial Instruments Standard

March 16, 2018

The Financial Accounting Standards Board (“FASB”) has issued a new standard that clarifies guidance under Accounting Standards Update (“ASU”) No. 2016-01, Financial Instruments—Overall (Subtopic 825-10). ASU No. 2018-03, Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, addresses the following issues:

  • Issue 1: Equity Securities without a Readily Determinable Fair Value — Discontinuation
  • Issue 2: Equity Securities without a Readily Determinable Fair Value — Adjustments
  • Issue 3: Forward Contracts and Purchased Options
  • Issue 4: Presentation Requirements for Certain Fair Value Option Liabilities
  • Issue 5: Fair Value Option Liabilities Denominated in a Foreign Currency
  • Issue 6: Transition Guidance for Equity Securities without a Readily Determinable Fair Value

Public companies must apply ASU No. 2018-03 to fiscal years starting after December 15, 2017, and to interim periods within those years starting after June 15, 2018. Public companies with fiscal years starting between December 15, 2017, and June 15, 2018, are required to adopt ASU 2018-03 in the interim period starting after June 15, 2018. Public companies with fiscal years starting between June 15, 2018, and December 15, 2018, do not have to adopt the amendments under ASU No. 2018-03 before adopting the amendments under ASU No. 2016-01. All other entities must adopt the amendments on the effective date in ASU No. 2016-01.

Early adoption is permitted for fiscal years, as well as interim periods within those years, starting after December 15, 2017, providing they have adopted ASU 2016-01.

More on the amendments in ASU No. 2018-03 is available on FASB.org.