New Developments Summary: Simplified hedge accounting approach

The new guidance in Accounting Standards Update 2014-03, Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps – Simplified Hedge Accounting Approach: a consensus of the Private Company Council, provides certain private companies with greater flexibility in meeting the hedge accounting documentation requirements and with relief from certain fair value measurement provisions in the FASB Accounting Standards Codification®, provided that an entity intends to economically convert variable rate debt into fixed rate debt using a “plain vanilla” swap contract and meets certain criteria. The new guidance is effective for annual periods beginning after Dec. 15, 2014, and for interim periods within annual periods beginning after Dec. 15, 2015, although early adoption is permitted.

Download the PDF.