FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115, provides all entities with an option to choose, at specified election dates, to measure selected financial assets and liabilities at fair value. The following items are eligible for the irrevocable fair value measurement option established by Statement No. 159:
- Recognized financial assets and financial liabilities except:
- An investment in a subsidiary that the entity is required to consolidate
- An interest in a variable interest entity that the entity is required to consolidate
- Employers’ and plans’ obligations (or assets representing net overfunded positions) for pension benefits, other postretirement benefits, postemployment benefits, employee stock option and stock purchase plans, and other forms of deferred compensation arrangements,
as defined
- Financial assets and financial liabilities recognized under lease accounting
- Deposit liabilities, withdrawable on demand, of banks, savings and loan associations, credit unions, and other similar depository institutions
- Financial instruments that are, in whole or in part, classified by the issuer as a component of shareholders’ equity, including “temporary equity”
- Firm commitments that would otherwise not be recognized at inception and that involve only financial instruments
- Nonfinancial insurance contracts and warranties that the insurer can settle by paying a third party to provide those goods or services
- Host financial instruments resulting from separation of an embedded nonfinancial derivative instrument from a nonfinancial hybrid instrument
Statement No. 159 is effective as of the beginning of an entity’s first fiscal year beginning after
November 15, 2007. At the effective date, an entity may elect the fair value option for eligible items that exist at that date. For an entity that has a calendar fiscal year, the election of the fair value option was available on January 1, 2008 for eligible items that existed on that date. Therefore, the ability to elect the fair value option for eligible items that existed on January 1, 2008 is no longer available for calendar year-end companies. Entities should retain evidence documenting the election of the fair value option for eligible items, including those for which the option was elected upon the adoption of Statement No. 159.
The Statement is available in full at http://www.fasb.org/pdf/fas159.pdf. |
