Upcoming FASB Hedge Accounting Changes Summarized

The Financial Accounting Standards Board’s (FASB) derivative and hedging rule changes are now expected to be out in final form in August 2017 according to a news release earlier this month.   The FASB noted that feedback on the coming changes has been overwhelmingly positive and well received. 

Generally, the new standard was designed to better align the accounting rules with a company’s risk management activities, better reflect the economic results of hedging in the financial statements and to simplify compliance with the hedge accounting rules. 

Under the new standard, hedge accounting opportunities will expand for both financial (interest rate and foreign currency) and non-financial (commodity) risks. Hedging results will be presented in a more transparent way, both on the face of the financial statements and in the footnotes. Summarized below is an overview of some of the most important changes that impact our clients.

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