New FASB Hedge Accounting Standard Intends to Simplify Rules, Create Transparency

The Financial Accounting Standards Board (FASB) has issued Accounting Standards Update (ASU) No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The ASU is intended to  improve and simplify financial reporting rules for hedge accounting.

Hedge Accounting

The new standard is designed to refine and expand hedge accounting for both financial (e.g., interest rate) and commodity risks. Its provisions are meant to enhance transparency in the presentation of economic results for both investors and analysts. The new requirements will affect presentation on the face of the financial statements and in the notes to the financial statements.

Effective Date

ASU No. 2017-12  is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, for public companies and for fiscal years beginning after December 15, 2019 (and interim periods for fiscal years beginning after December 15, 2020), for private companies. Early adoption is permitted in any interim period or fiscal years before the effective date of the standard.

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CCH ARM Editorial

CCH ARM Editorial

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