Codification improvements to financial instruments


FASB ASU 2020-03, Codification Improvements to Financial Instruments, clarifies and improves the accounting and disclosure guidance in various Codification Topics for financial instruments. In particular, the amendments

  • Clarify certain disclosure requirements, including fair-value option disclosures
  • Add cross-references in U.S. GAAP to clarify certain guidance
  • Clarify the applicability of the portfolio exception in ASC 820, Fair Value Measurement, to nonfinancial items
  • Make clear the determination of the contractual life of a net investment in leases in estimating expected credit losses under ASC 326, Financial Instruments – Credit Losses
  • Explain the interaction between the guidance in ASC 860-20, Transfers of Financial Assets – Sales of Financial Assets, and in ASC 326 for rerecognized financial assets.

This New Developments Summary explores the new amendments, including an illustrative example and our insights on the new guidance.



Audit insights and technical guidance