FASB Proposed Changes Interest Rate Hedge Accounting


March 2017

Under the proposed guidance, companies that hedge variable rate debt would be required to change the way they assess hedge effectiveness and measure and record any hedge ineffectiveness. The new guidance would allow companies to perform ongoing effectiveness assessment on a qualitative basis if the hedging relationship hasn’t changed and if hedge mismatches are not expected to occur. Quantitative effectiveness testing would continue to be required at inception of the hedging relationship.

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