FASB Proposes Improvements to Hedge Accounting
November 12, 2019
The FASB has issued a proposed Accounting Standards Update (ASU), Codification
Improvements to Hedge Accounting.
The proposed ASU would clarify certain aspects of the Board’s new
hedging standard, ASU 2017-12, including (1) changes in hedged risk in a cash
flow hedge, (2) contractually specified components in cash flow hedges of
nonfinancial forecasted transactions, (3) foreign-currency-denominated debt
instruments designated as hedging instruments and hedged items, and (4) using the
term “prepayable” under the shortcut method. According to FASB Chairman Russ Golden,
the purpose of the proposed ASU is to “promote . . . better, more consistent
application” of the hedging standard by better aligning certain aspects of the
standard with its “stated objectives.”
Comments on the proposed ASU are due by January 13, 2020. For more information,
see the press release and FASB in Focus newsletter on the FASB’s Web site.
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On November 13, 2019, the FASB issued for
comment Proposed Taxonomy Improvements for Proposed
Accounting Standards Update, Derivatives and Hedging
(Topic 815): Codification Improvements to Hedge
Accounting. Comments on the proposed taxonomy improvements are due
by January 13, 2020.
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