Defining Issues | November 2020



FASB proposes relief for discounting transition

Proposed ASU would extend relief for reference rate reform to derivatives impacted by discounting transition.

The proposed ASU would permit a company to apply optional expedients to derivative instruments modified because of discounting transition.


Proposed ASU

  • Companies with derivative contracts modified because of discounting transition

Relevant dates

  • October 29, 2020 – Proposed ASU issued
  • November 13, 2020 – Comments due 

Key impacts

Proposed amendments to ASC 848 would:

  • Permit a company to apply certain optional expedients to modifications of interest rate indexes used for margining, discounting or contract price alignment of certain derivatives as a result of reference rate reform initiatives (‘discounting transition’).
  • Extend optional expedients to account for a modified derivative contract modified as a continuation of the existing contract and to continue hedge accounting when certain critical terms of a hedging relationship change to modifications made as part of the discounting transition.

Subscribe to our newsletter

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


Use our Accounting Research Online for financial reporting resources.