This chapter discusses the application of ASC 820 to fair value measurements of financial assets and financial liabilities. It should be read in connection with the overall framework in FV 3, the key concepts in FV 4, and nonperformance risk in FV 8. This chapter assumed adoption of ASU 2016-13, Measurement of Credit Losses on Financial Instruments.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurements of Equity Securities Subject to Contractual Sale Restrictions. ASU 2022-03 amended Example 6, Case A in ASC 820 and further clarified within ASC 820 that a contractual restriction on the sale of an equity security (for example, an underwriter lock-up agreement) is not considered part of the unit of account of an equity security. As a result, such restriction is not considered in measuring fair value of the equity security. ASU 2022-03 is effective for public business entities for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For all other entities, the guidance is effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. Refer to FV 6.2.4 for further details.

ASU 2016-13, Measurement of Credit Losses on Financial Instruments was effective for public business entities that are SEC filers for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other public business entities, ASU 2016-13 was effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all other entities, including not-for-profit entities and employee benefit plans within the scope of ASC 960 through ASC 965 on plan accounting, the amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021.