Effective date reminder and updated whitepaper on ASU 2016-01
FINANCIAL REPORTING INSIGHTS |
Financial Accounting Standards Board Accounting Standards Update (ASU) 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, as recently clarified by ASU 2018-03, Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, came in to effect on January 1, 2018 for calendar year public business entities and has provisions for early adoption. We recently updated our whitepaper to incorporate the clarifications brought forth by ASU 2018-03.
As a reminder, among other changes summarized in the whitepaper, ASU 2016-01 requires equity securities to be measured at fair value, with unrealized holding gains and losses reflected in net income. There is a measurement alternative available whereby certain entities can make an election on a security-by-security basis to account for qualifying equity securities that do not have readily determinable fair values at cost, with adjustments for impairment, and observable price changes in orderly transactions for the identical or a similar investment of the same issuer, reflected in earnings. If made, this election should be documented at the time of adoption (for existing securities) or at the time of purchase for securities acquired subsequent to the date of adoption. Refer to our updated whitepaper for additional information on this and other changes brought forth by ASU 2016-01 as clarified.