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FASB issues standard to improve fair value guidance for equity securities

On June 30, the FASB issued an Accounting Standards Update to increase the comparability of financial information across reporting entities that have investments in equity securities measured at fair value that are subject to contractual restrictions preventing the sale of those securities.

The amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security. As a result, it should not be considered in measuring fair value. New disclosures are required about the nature of the restrictions and their remaining duration.

For public business entities, the amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. All other entities have an additional year. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance.
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