FASB Consults on Interactions Among Topics 321, 323, and 815

The amendments in the proposed ASU would affect all entities that apply the guidance in Topics 321, 323, and 815 and either elect to apply the measurement alternative or enter into a forward contract or purchase an option to purchase securities that, on settlement of the forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting. The key proposed amendments include the following:

• Accounting for Certain Equity Securities on Application or Discontinuation of the Equity Method of Accounting—The proposed ASU would clarify that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323 for the purposes of applying the measurement alternative in accordance with Topic 321, immediately before applying or on discontinuing the equity method.
• Scope Considerations for Forward Contracts and Purchased Options on Certain Securities—The proposed ASU provides guidance on questions received about how to apply the guidance in Topic 815 on "Derivatives and Hedging" for certain forward contracts and purchased options to purchase securities that, on settlement or exercise, would be accounted for under the equity method of accounting. 

Related Links

• Press Release
• Exposure Draft (PDF)

Comment Due Date: August 29, 2019

Keywords: Americas, US, Banking, Securities, Accounting, Derivatives and Hedging, Financial Instruments, Topic 321, Topic 815, Topic 323, Accounting Standards Update, FASB