The Financial Accounting Standards Board’s Emerging Issues Task Force has issued an accounting standards update on the effect of derivative contract novations on existing hedge accounting relationships.

In a novation, one of the parties to a derivative instrument is replaced with a new party. FASB noted that derivative instrument novations can occur for various reasons, including mergers of financial institutions and intercompany transactions. The novation may involve a hedging instrument in a hedging relationship that has been designated under Topic 815 of the FASB Accounting Standards Codification, Derivatives and Hedging.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access