United States

SAB Topic 5.M not applicable upon adoption of FASB ASC 321

FINANCIAL REPORTING INSIGHTS  | 

The SEC staff recently issued Staff Accounting Bulletin (SAB) No. 117 to bring its existing guidance into conformity with Topic 321 of the FASB’s Accounting Standards Codification, “Investments —Equity Securities.” SAB 117 states that SAB Topic 5.M, “Other Than Temporary Impairment of Certain Investments in Equity Securities, no longer is applicable upon a registrant’s adoption of ASC 321. Topic 5.M provided the SEC staff’s views on evaluating whether an impairment loss should be recognized in net income for investments in equity securities that were measured at fair value with changes in fair value presented in other comprehensive income.

For public business entities, Topic 321 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. After a registrant adopts ASC 321, investments in equity securities that previously qualified for presenting changes in fair value within other comprehensive income will be measured at fair value with changes in fair value presented immediately in net income.