Companies with derivative contracts modified because of discounting transition
October 29, 2020 – Proposed ASU issued
November 13, 2020 – Comments due
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.