Wiley GAAP: Financial Statement Disclosure Manual

58ASC 848 REFERENCE RATE REFORM

1. Authoritative Literature
   1. Technical Alert
      1. Effective Dates
      2. Sunset Provision
   2. Subtopics
   3. ASC 848‐10, Overall
      1. Scope
      2. Subsequent Measurement
   4. ASC 848‐20, Contract Modifications
      1. Scope and Scope Exceptions
      2. Subsequent Measurement
   5. ASC 848‐30, Hedging—General
   6. ASC 848‐40, Fair Value Hedges
   7. ASC 848‐50, Cash Flow Hedges
2. Presentation and Disclosure Examples
   1. Example 58.1: Reference Rate Reform—Recent Accounting Pronouncement
   2. Example 58.2: Reference Rate Reform—New Accounting Pronouncement—Affected Loans Identified

AUTHORITATIVE LITERATURE

Technical Alert

In March 2020, the FASB issued ASU 2020‐04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU was issued in response to concerns about the structural risks of interbank‐offered rates and the risks of cessation of LIBOR and is designed to provide relief from the potential accounting burden when transitioning from reference rates, like LIBOR, that may be discontinued. FASB stakeholders raised concerns about contract modifications, hedge accounting, and the volume of contracts, such as debt agreements, leases, and derivatives.

If certain criteria are met, the ASU's changes offer optional expedients and exceptions for applying the Codification to the contract, hedging relationships, and other matters. ASC 848 is unique in that the guidance sunsets in 2022. When certain benchmark rates are discontinued, contracts will be modified. The ...