2. Amend paragraph 848-10-65-1 and its related heading and amend pending content transition date for all paragraphs that link to paragraph 848-10-65-1 as follows:
Reference Rate Reform—Overall
Transition and Open Effective Date Information
> Transition Related to Accounting Standards Update
Updates No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848
848-10-65-1 The following represents the transition, end of application, and effective date information related to Accounting Standards
Update
Updates No. 2020-04,
Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848:
a. The pending content that links to this paragraph shall be effective for all entities as of March 12, 2020 through December 31,
2022
2024, as follows:
1. An entity may elect to apply the pending content that links to this paragraph for contract modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected for a Topic or an Industry Subtopic, the pending content that links to this paragraph shall be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic in accordance with paragraph 848-20-35-1.
2. An entity may elect to apply the pending content that links to this paragraph to eligible hedging relationships existing as of the beginning of the interim period that includes March 12, 2020 and to new eligible hedging relationships entered into after the beginning of the interim period that includes March 12, 2020.
i. If an entity elects to apply any of the pending content that links to this paragraph for an eligible hedging relationship existing as of the beginning of the interim period that includes March 12, 2020, any adjustments as a result of those elections shall be reflected as of the beginning of that interim period and recognized in accordance with Subtopics 848-30, 848-40, and 848-50 (as applicable). If an entity elects to apply any of the pending content that links to this paragraph for a new hedging relationship entered into between the beginning of the interim period that includes March 12, 2020 and March 12, 2020, any adjustments as a result of those elections shall be reflected as of the beginning of the hedging relationship and recognized in accordance with Subtopics 848-30, 848-40, and 848-50 (as applicable).
01. For private companies that are not financial institutions as described in paragraph 942-320-50-1 and not-for-profit entities (except for not-for-profit entities that have issued, or are a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market), an entity shall update its hedge documentation (as applicable) noting the changes made before the next interim (if applicable) or annual financial statements are available to be issued.
02. For all other entities, an entity shall update its hedge documentation (as applicable) noting the changes made no later than when the entity performs its first quarterly assessment of effectiveness after the election.
3. The pending content that links to this paragraph shall not be applied to all the following:
i. Contract modifications made after December 31,
2022
2024.
ii. New hedging relationships entered into after December 31,
2022
2024.
iii. Hedging relationships evaluated for periods after December 31,
2022
2024, except for hedging relationships existing as of December 31, 20222024, that apply the following optional expedients in Subtopics 848-30 and 848-40 that shall be retained through the end of the hedging relationship (including for periods evaluated after December 31,
2022
2024):
01. An optional expedient to the systematic and rational method used to recognize in earnings the components excluded from the assessment of effectiveness in paragraph 848-30- 25-12.
02. An optional expedient to the rate to discount cash flows associated with the hedged item and any adjustment to the cash flows for the designated term or the partial term of the designated hedged item in a fair value hedge in paragraph 848-40-25-6.
03. An optional expedient to not periodically evaluate the conditions in paragraph 815-20-25-104(d) and (g) when using the shortcut method for a fair value hedge in paragraph 848-40-25-8.
b. An entity may elect the optional expedients in Subtopics 848-30, 848-40, and 848-50 if it has adopted the amendments in Accounting Standards Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.
c. An entity that has not adopted the amendments in Update 2017-12 may elect the following optional expedients in Subtopics 848-30, 848-40, and 848-50:
1. An optional expedient allowing changes in critical terms of a hedging relationship in paragraphs 848-30-25-3 through 25-7.
2. An optional expedient allowing a change to the method designated for use in assessing hedge effectiveness in a cash flow hedge in paragraph 848-30-25-8 if the optional expedient method being elected is the simplified hedge accounting approach for eligible private companies for initial hedge effectiveness in paragraph 848- 50-25-8 or for subsequent hedge effectiveness in paragraph 848-50- 35-7.
3. An optional expedient allowing an entity to assume that the hedged forecasted transaction in a cash flow hedge is probable of occurring in paragraph 848-50-25-2.
4. An optional expedient allowing an entity to assume that the reference rate will not be replaced for the remainder of the hedging relationships in paragraph 848-50-25-11(a) for initial hedge effectiveness and paragraph 848-50-35-17(a) for subsequent hedge effectiveness when the entity is using any of the methods for assessing and measuring hedge effectiveness in a cash flow hedge on a quantitative basis and if both the hedged forecasted transaction and the hedging instrument have a reference rate that meets the scope of paragraph 848-10-15-3.
5. An optional expedient allowing an entity to disregard certain requirements of the simplified hedge accounting approach for eligible private companies for initial hedge effectiveness in paragraph 848-50-25-8 or for subsequent hedge effectiveness in paragraph 848-50- 35-7 in a cash flow hedge.
d. The one-time election to sell, transfer, or both sell and transfer debt securities classified as held to maturity in accordance with paragraphs 848-10-35-1 through 35-2 may be made at any time after March 12, 2020, but no later than December 31,
2022
2024.
e. An entity shall provide the following disclosures:
1. The nature of and reason for electing to apply the pending content that links to this paragraph.
2. The disclosures in (e)(1) in each interim and annual financial statement period in the fiscal year of application.
PENDING CONTENT
Transition Date: (P) January 1,
2023
2025; (N) January 1,
2023
2025 |
Transition Guidance: 848-10-65-1
3. Amend pending content transition date for all superseded paragraphs that link to paragraph 848-10-65-1 as follows:
PENDING CONTENT
Transition Date: (P) January 1,
2023
2025; (N) January 1,
2023
2025 |
Transition Guidance: 848-10-65-1
Paragraph superseded by Accounting Standards Update No. 2020-04.
4. Amend paragraph 848-10-65-2 and its related heading as follows:
> Transition Related to Accounting Standards Update
Updates No. 2021-01, Reference Rate Reform (Topic 848): Scope, and No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848
848-10-65-2 The following represents the transition, end of application, and effective date information related to Accounting Standards
Update
Updates No. 2021-01,
Reference Rate Reform (Topic 848): Scope, and No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848:
a. The pending content that links to this paragraph shall be effective for all entities as of January 7, 2021 through December 31,
2022
2024, as follows:
1. An entity may elect to apply the pending content that links to this paragraph on contract modifications that change the interest rate used for margining, discounting, or contract price alignment retrospectively as of any date from the beginning of the interim period that includes March 12, 2020, or prospectively to new modifications from any date within the interim period that includes or is subsequent to January 7, 2021, up to the date that financial statements are available to be issued. On the date that an entity elects to apply the pending content that links to this paragraph on contract modifications that change the interest rate used for margining, discounting, or contract price alignment, that pending content shall be applied to all eligible contract modifications modified in that manner in accordance with paragraph 848-20-35-1.
2. An entity may elect to apply the pending content that links to this paragraph to eligible hedging relationships existing as of the beginning of the interim period that includes March 12, 2020, and to new eligible hedging relationships entered into after the beginning of the interim period that includes March 12, 2020. If an entity elects to apply any of the pending content that links to this paragraph to an eligible hedging relationship, any adjustments as a result of those elections shall be reflected as of the application date of the election and recognized in accordance with Subtopics 848-30, 848-40, and 848-50 (as applicable).
i. For a private company that is not a financial institution as described in paragraph 942-320-50-1 and a not-for-profit entity (except for a not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market) applying the pending content that links to this paragraph in a period before interim (if applicable) or annual financial statements are available to be issued, the entity shall update its hedge documentation (as applicable) noting the changes made before the next interim (if applicable) or annual financial statements are available to be issued. An entity that retrospectively applies the pending content that links to this paragraph to a prior interim (if applicable) or annual period shall update its hedge documentation (as applicable) noting the changes made for the prior periods in which the entity is retrospectively applying the guidance upon adoption.
ii. For any other entity applying the pending content that links to this paragraph before its first quarterly assessment of effectiveness after the election, the entity shall update its hedge documentation (as applicable) noting the changes made no later than when the entity performs its first quarterly assessment of effectiveness after the election. An entity that retrospectively applies the pending content that links to this paragraph to a prior interim or annual period shall update its hedge documentation (as applicable) noting the changes made for the prior periods in which the entity is retrospectively applying the pending content that links to this paragraph upon adoption.
3. The pending content that links to this paragraph shall not be applied to all the following:
i. Contract modifications made after December 31,
2022
2024.
ii. New hedging relationships entered into after December 31,
2022
2024.
iii. Hedging relationships evaluated for periods after December 31,
2022
2024, except for hedging relationships that apply the following optional expedients in Subtopics 848-30, 848-40, and 848-50 that shall be retained through the end of the hedging relationship (including for periods evaluated after December 31,
2022
2024):
01. An optional expedient to adjust the fair value hedge basis adjustment in a fair value hedge accounted for under the shortcut method using a reasonable approach in paragraph 848-30-25-11B.
02. An optional expedient to not periodically evaluate the conditions in paragraph 815-20-25-104(d) and (g) when using the shortcut method for a fair value hedge in paragraph 848-40-25-8 if the entity elected the practical expedient in paragraph 848-30-25-11B. (If an entity elects to apply the optional expedient in paragraph 848-40-25-8 in accordance with paragraph 848-30-25-10, it shall cease applying that expedient on December 31,
2022
2024.)
03. An optional expedient to adjust the amount recorded in accumulated other comprehensive income using a reasonable approach in paragraph 848-30-25-11C.
04. An optional expedient to continue using a subsequent assessment method that assumes perfect effectiveness in paragraphs 848-50-35-4 through 35-9 for a cash flow hedge if the entity elected the practical expedient in paragraph 848-30-25-11C.
b. An entity may elect the optional expedients in Subtopics 848-30, 848-40, and 848-50 if it has adopted the amendments in Update 2017-12.
c. An entity that has not adopted the amendments in Update 2017-12 may elect the optional expedient allowing a change to the method designated for use in assessing hedge effectiveness in a cash flow hedge in paragraph 848-30-25-11A(b) if the optional expedient method being elected is the simplified hedge accounting approach for eligible private companies for subsequent hedge effectiveness in paragraph 848-50-35-7.
d. An entity shall provide the following disclosures:
1. The nature of and reason for electing to apply the pending content that links to this paragraph.
2. The disclosures in (d)(1) in each interim (if applicable) and annual financial statement period in the fiscal year of application.
5. Amend pending content transition date for all superseded paragraphs that link to paragraph 848-10-65-2 as follows:
PENDING CONTENT
Transition Date: (P) January 1,
2023
2025; (N) January 1,
2023
2025 |
Transition Guidance: 848-10-65-2
Paragraph superseded by Accounting Standards Update No. 2021-01.