Applicable Changes
What is one issue that was prompted during this topic?
1. Change in Hedged Risk in a Cash Flow Hedge
2. Cash Flow Hedges of Nonfinancial Forecasted Transactions
3. Foreign Currency Denominated Debt Instrument as Dual Hedge
4. Using the Term Prepayable under the Shortcut Method
The purpose of this ASU is to simplify the application of hedge accounting guidance in GAAP
ASU No. 2017-12: Targeted Improvements to Accounting for Hedging Activities
Name the 3 constituents that wrote comment letters
NYSSCPA, EY, JP Morgan
Hedge Accounting Improvements is this Topic #
815
What term does the FASB recommend changing "prepayable" to and why?
Early settlement feature.
This kind of disclosure traces location and amount of gain/loss on items in the income statement to hedging activities
Tabular Disclosure
This constituent supports the proposed updates but thinks even more guidance is needed
EY
Why does the FASB recommend changing the term "prepayable" to something else?
The term prepayable means two different things in different capacities.
True or False: Gains and losses on the remeasurement of the debt instrument's fair value hedge basis adjustment at the spot rate would be immediately recognized in earnings.
True
This method was established in ASU No. 2022-01, and expanded the scope of closed portfolios
Portfolio layer method
Name one reason a company would be in support of the proposed updates
Clarity, improve Topic 815 guidance, reduce complexity, eliminate challenges with 815 guidance, etc.
Is it true or false that early adoption is permitted for these two ASUs?
True
What two hedges are excluded from the scope of the change in hedged risk guidance?
Hedges of foreign exchange risk and hedges of credit risk
During this year, The FASB released its second ASU regarding Hedge Accounting Improvements
2022
This constituent has a general support for the proposed updates, but has some opposition
JP Morgan
The ASUs are effective fist for this kind of business entity
Public
How should an entity assess hedge effectiveness?
By using it's then-best estimate of the hedged risk
During this month, ASU No. 2017-12 was issued
August
Name one reason a company would oppose the proposed updates
burdens preparers, too many detailed regulations, increased volume of effectiveness testing, etc.
One way ASU 2017-02 simplifies hedge accounting is by ______ unnecessary disclosures regarding ineffectiveness of the hedge
eliminating