ASU 2016-01
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Yesterday, January 5, 2016, the FASB issued Accounting Standards Update (ASU) 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The new standard affects all entities that hold financial assets or owe financial liabilities. The FASB retained the main provisions of U.S. generally accepted accounting principles (U.S. GAAP) for financial instruments, continuing the use of a mixed-attribute measurement model for financial assets and financial liabilities. The amendments in ASU 2016-01 address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments in ASU 2016-01 supersede the current guidance to classify equity securities with readily determinable fair values into different categories (i.e., trading or available-for-sale). The new standard does not change U.S. GAAP for most classification and measurement decisions for financial instruments, such as initial and subsequent measurement of loans, debt securities, and financial liabilities. (The FASB also is addressing measurement of credit losses on financial assets in a separate project).
Recognition Measurement Main Provisions The amendments in ASU 2016-01:
Effective Date and Transition The amendments in ASU 2016-01 are effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For all other entities, including not-for-profit (NFP) organizations and employee benefit plans, the amendments are effective for fiscal years beginning after December 15, 2018, and for interim periods within fiscal years beginning after December 15, 2019. All organizations that are not public companies may adopt the amendments in ASU 2016-01 earlier as of the fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption of the amendments in ASU 2016-01 is not permitted, except for early application of the “own credit” provision and the provision that exempts private companies and NFP organizations from the requirement to apply the fair value of financial instruments disclosure guidance. An organization should apply the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption of the standard. |