The FASB voted to adopt a proposed update to its GAAP standards for derivatives to go into effect in less than a year, with all entities required to comply with the new rules for annual reporting periods and interim periods beginning after Dec. 15, 2026
The update relates to the scope of the rules formally known as Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606).
The FASB’s push to update the standards began in 2021, following stakeholder feedback that it was challenging to determine which transactions were considered derivatives under the current accounting rules.
Under the update, the derivative accounting rules will not apply to certain ESG-linked financial instruments as well as research and development and litigation funding arrangements. Learn more.