United States

Updates to our hedging guide for ASU 2019-04


In August 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which brought forth some long-awaited improvements to hedge accounting. Various provisions of ASU 2017-12 were subsequently clarified by the FASB in April 2019 through the issuance of ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.

We have updated our publication, A guide to hedge accounting upon the adoption of ASU 2017-12 (our hedging guide), for the clarifications made by ASU 2019-04, including those related to having multiple separately designated partial-term fair value hedging relationships of a single financial instrument outstanding at the same time. In addition, a summary of the clarifications made by ASU 2019-04 to the improvements in ASU 2017-12 has been added to Appendix A of our hedging guide. This summary includes discussion of the effective date and transition provisions of ASU 2019-04 for situations in which ASU 2017-12 has already been adopted and situations in which ASU 2017-12 has not yet been adopted. The most notable transition provision is that an entity that has already adopted ASU 2017-12, but did not transfer any held-to-maturity debt securities to available-for-sale as permitted by the transition provisions for ASU 2017-12 (which are included in ASC 815-20-65-3), may still make such a transfer for qualifying securities under the transition provisions of ASU 2019-04.