Wiley GAAP 2019

17ASC 320 INVESTMENTS—DEBT AND EQUITY SECURITIES¹

PERSPECTIVE AND ISSUES

Technical Alert

The FASB has an ongoing financial instruments project. As part of this project, in January 2016, the FASB issued ASU 2016-01 and in June 2016 issued ASU 2016-13. Both of these are discussed below. As explained in Footnote 1, this chapter reflects existing guidance and not the ASU 2016-01 and ASU 2016-13 changes.

ASU 2016-01

NOTE: ASU 2016-01 has a significant effect on ASC 320. For more detail on the ASU, see Chapter 18.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.

Guidance

The ASU affects guidance on:

• Equity investments that are not consolidated or accounted for under the equity method,
• Financial liabilities under the fair value option, and
• Presentation and disclosure requirements for financial instruments.

There is now a split in the accounting for debt and equity securities. This resulted in the addition of ASC 321 and changes in terminology in the other investment topics.

Effective dates

ASC 2016-01 is effective:

• For public business entities––fiscal years beginning after December 15, 2017, including interim periods within fiscal years beginning after December 15, 2019.
• For all other entities––fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted for provisions that eliminate ...