Reference Rate Reform


The FASB issued Update 2020-04 to provide temporary optional guidance to ease the potential burden in accounting for reference rate reform.

The amendments in Update 2020-04 are elective and apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued.

The new guidance provides the following optional expedients:
  1. Simplify accounting analyses under current GAAP for contract modifications.
  2. Simplify the assessment of hedge effectiveness and allow hedging relationships affected by reference rate reform to continue.
  3. Allow a one-time election to sell or transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform.
An entity may elect to apply the amendments prospectively through December 31, 2022. Continue to Full Project Information

Additional Information


Technical Inquiries

Submit questions about applying the new requirements through the FASB’s Technical Inquiry System.