FASB issues ASU to extend relief for LIBOR transition
Defining Issues | December 2022
Entities can apply accounting relief for contracts and transactions affected by reference rate reform until Dec 31, 2024.
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The ASU defers the sunset date of ASC 848 to December 31, 2024. ASC 848 provides relief for companies preparing for the discontinuation of interest rates, such as LIBOR.
Applicability
- All companies with contracts or hedging relationships that reference an interest rate expected to be discontinued, such as LIBOR.
Relevant dates
- December 21, 2022: FASB issues ASU 2022-06
- ASU is effective immediately for all entities and is applied prospectively.
Key Impacts:
- ASC 848 provides companies with optional expedients that permit an entity to not apply otherwise applicable US GAAP to contracts or transactions that are modified or otherwise affected due to reference rate reform.
- ASC 848 includes a date – referred to as a ‘sunset date’ – after which an entity may no longer apply those expedients.
- The ASU defers the sunset date of ASC 848 from December 31, 2022 to December 31, 2024. Entities that apply ASC 848 can continue to do so until December 31, 2024.
Explore more
Resource
Handbook: Reference rate reform
Latest edition: Our in-depth guidance on ASC 848’s optional relief for affected contracts and transactions.
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Handbook: Derivatives and hedging
Latest edition: Our in-depth guide on derivatives and hedge accounting, with our latest interpretations.
Reference Library
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Mark Northan
Partner, Dept. of Professional Practice, KPMG US
Lisa Blackburn
Partner, Dept. of Professional Practice, KPMG US