Wiley GAAP 2024

58ASC 848 REFERENCE RATE REFORM

1. Technical Alert
   1. ASU 2022-06
   2. ASU 2020-06
      1. Guidance
      2. Effective Dates
      3. Sunset Provision
   3. ASU 2021-01
      1. Guidance
      2. Effective Dates and Transition
      3. Practice Alert
   4. Perspective and Issues
      1. Subtopics
   5. Definitions of Terms
   6. Concepts, Rules, and Examples
      1. ASC 848-10, Overall
         1. Scope
         2. Subsequent Measurement
      2. ASC 848-20, Contract Modifications
         1. Scope and Scope Exceptions
         2. Subsequent Measurement
      3. ASC 848-30, Hedging
      4. ASC 848-40, Fair Value Hedges
      5. ASC 848-50, Cash Flow Hedges

TECHNICAL ALERT

ASU 2022-06

In March 2021, the UK Financial Conduct Authority (FCA) announced the sunset date of USA LIBOR would be June 30, 2023, beyond the then current sunset date of ASC 848. In response, in December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. Effective upon issuance, the ASU extends the time entities can use for reference rate reform relief. The ASU defers the sunset date of ASC 848 from December 31, 2022, the date in ASU 2020-04, to December 31, 2024.

ASU 2020-06

A reference rate is a variable interest rate entities use to determine interest-related cash flows. Interbank offered rates (IBORS) are used as reference rates for a large volume and across a range of financial products. For instance, IBORs are used in lease agreements and debt arrangements. IBORs include:

• GBP LIBOR
• Euribor
• CHF LIBOR
• JPY LIBOR
• TIBOR
• HIBOR

To tie benchmark rates more closely to observable, arms-length transactions, ...