United States

ASU 2020-03 addresses various financial instruments topics

FINANCIAL REPORTING INSIGHTS  | 

The Financial Accounting Standards Board (FASB) recently issued Accounting Standards Update (ASU) 2020-03, Codification Improvements to Financial Instruments, which addressed various issues including the following, among others:

  • The amendments clarify that all entities are required to provide the fair value option disclosures in paragraphs 825-10-50-24 through 50-32 of the FASB’s Accounting Standards Codification (ASC).
  • The amendments clarify that the contractual term of a net investment in a lease determined in accordance with ASC 842, “Leases,” should be the contractual term used to measure expected credit losses under ASC 326, “Financial Instruments – Credit Losses.”
  • The amendments to ASC 860-20, “Transfers and Servicing – Sales of Financial Assets,” clarify that when an entity regains control of financial assets sold, an allowance for credit losses should be recorded in accordance with ASC 326.

The effective dates for all issues addressed in ASU 2020-03 are stated within the ASU.

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