Tentative Board Decisions

Tentative Board decisions are provided for those interested in following the Board’s deliberations. All of the reported decisions are tentative and may be changed at future Board meetings.

1. Sweep issues arising from drafting and external review
2. Additional transition issues arising from redeliberations and external review
3. Substantive drafting changes to be made to the final Update
4. Effective date and early adoption
5. Analysis of costs, benefits, and complexities of decisions reached to date on hedge accounting and permission to ballot a final Accounting Standards Update.

1. To expand the scope of the private company hedge documentation timing decision to 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).
2. To expand the scope of the amortization approach for amounts excluded from the assessment of effectiveness to hedges of a net investment in a foreign operation.

1. An entity is not required to assess similar hedges in a similar manner when comparing similar hedging relationships executed before and after the adoption date for any of the following:
   1. For (1) hedging relationships executed before the adoption date designated under the shortcut method for which the hedge documentation was not amended to specify a long-haul method that would be employed if use of the shortcut method was not or no longer is appropriate and (2) hedging relationships executed after the adoption date designated under the shortcut method for which a long-haul method is specified if use of the shortcut method was not or no longer is appropriate.
   2. For (1) hedging relationships executed before the adoption date for which the hedged risk was not amended to a contractually specified component or a contractually specified interest rate and (2) hedging relationships executed after the adoption date for which the hedged risk is the variability in cash flows attributable to changes in a contractually specified component or a contractually specified interest rate.
   3. For (1) hedging relationships executed before the adoption date for which amounts excluded from the assessment of effectiveness are recorded in earnings under a mark-to-market approach and (2) hedging relationships executed after the adoption date for which amounts excluded from the assessment of effectiveness are recorded in earnings under an amortization approach.
2. An entity will not be required to assess similar hedges in a similar manner when an entity assesses effectiveness on a qualitative basis, as proposed in the proposed Update. Qualitative assessments may be performed on a hedge-by-hedge basis.
3. An entity may elect in transition to transfer financial assets classified as held-to-maturity that qualify as hedged items under the last of layer method to the available-for-sale category.
4. Cross-currency basis spreads may be excluded from the assessment of effectiveness for existing fair value hedging relationships as of the date of adoption.
5. Private companies that are not financial institutions 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) must make transition elections before the next set of interim (if applicable) or annual financial statements is available to be issued. All other entities must make those elections before the first effectiveness testing date after adoption.
6. For fair value hedges of interest rate risk existing as of the date of adoption for which an entity modifies the measurement of the hedged item to the benchmark rate component cash flows, an entity may elect to partially dedesignate a portion of the hedged item and reclassify the basis adjustment associated with the portion of the dedesignated hedged item to the opening balance of retained earnings.