FASB Issues Guidance to Assist in Transition to New Reference Rates

The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022; one exception to this timeline is for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments to the FASB Accounting Standards Codification® in this Accounting Standards Update require improvements to the U.S. GAAP financial reporting taxonomy. The improvements that will be incorporated into the proposed 2021 Taxonomy are available through taxonomy improvements and finalized as part of the annual release process. According to the FASB Chair Russel G. Golden, the new Accounting Standards Update provides stakeholders with the guidance needed to ease the process of migrating away from LIBOR and other interbank offered rates to new reference rates. This guidance will address the operational challenges stakeholders have already raised with the board and will help to simplify matters going forward. 

Related Links

• Press Release
• Accounting Standards Update (PDF)
• Overview of Accounting Standards Update

Keywords: Americas, US, Banking, Insurance, Securities, Accounting, LIBOR, Risk-free Rates, Accounting Standards Update, US GAAP, FASB