Wiley GAAP 2014: Interpretation and Application of Generally Accepted Accounting Principles

50   ASC 825 FINANCIAL INSTRUMENTS

Perspective and Issues

Subtopics

Scope and Scope Exceptions

Overview

Technical Alert

Definitions of Terms

Concepts, Rules, and Examples

ASC 825-10-25, Financial Instruments: The Fair Value Option

Flexibility of application

Timing of the election

Financial statement presentation and disclosure

Statement of financial position

Statement of cash flows

Disclosure objectives

Example of disclosure ASC 820 and ASC 825-10-25 combined with ASC 825-10-50 disclosures

PERSPECTIVE AND ISSUES

Subtopics

ASC 825, Financial Instruments, contains two Subtopics:

• ASC 825-10, Overall, which has two Subsections:
  • General, which provides guidance on credit losses on financial instruments with off-balance-sheet credit risk and some disclosures about financial instruments
  • Fair Value Option, which provides guidance on the circumstances under which entities may choose the fair value option and the related presentation and disclosure requirements
• ASC 825-20, Registration Payment Arrangements.

Scope and Scope Exceptions

The following items are eligible for the fair value option (also see the chapter on ASC 820 – the summary table in the section of the entitled “The Mixed Attribute Model”):

1. All recognized financial assets and financial liabilities except
   1. Investments in subsidiaries required to be consolidated by the reporting entity
   2. Interests in variable interest entities required to be consolidated by the reporting entity¹
   3. Employers' and plans' obligations (unfunded ...