Defining Issues | November 2018

FASB proposes clarifications for financial instruments

Filed under: Financial instruments

The FASB has proposed amendments related to classification and measurement, credit losses and hedging. The proposed ASU provides clarifications for financial instruments – classification and measurement (ASU 2016-01), credit losses (ASU 2016-13) and derivatives and hedging (ASU 2017-12).


  • Companies that hold financial instruments in the scope of the credit losses standard
  • Companies that hold equity investments
  • Companies that apply hedge accounting

Relevant dates

  • November 19, 2018 – FASB issued proposed ASU
  • December 19, 2018 – Comments due on proposed ASU

Key impacts

  • The estimate of expected credit losses would include expected recoveries of financial assets previously written off.
  • Contractual extensions that are not unconditionally cancellable by the lender are considered when determining the contractual term.
  • If an entity applies the measurement alternative and a transaction price for a similar or identical security is observed, the equity security should be measured at fair value under Topic 820.  

Related content




Subscribe to our newsletter

Receive timely updates on accounting and financial reporting topics from KPMG.