FASB Issues ASU on Transition for Sold Contracts

The FASB has issued Accounting Standards Update (ASU) No. 2022-05, Transition for Sold Contracts. The ASU amends the transition guidance in ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts, to “allow an insurance entity to make an accounting policy election to exclude certain contracts or legal entities from applying the LDTI guidance when, as of the LDTI effective date, (a) the insurance contracts have been derecognized because of a sale or disposal and (b) the insurance entity has no significant continuing involvement with the derecognized contracts.”

For more information, see the press release on the FASB’s Web site.