In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs that is intended to clarify the accounting for certain callable debt securities. The amendment is intended to make the guidance easier to understand and easier to apply by eliminating inconsistencies and providing clarifications.

The amendments in ASU 2020-08 clarify that for callable debt securities with multiple call dates, the reevaluation of whether the amortized cost basis exceeds the amount repayable by the issuer at the next call date should be performed in each reporting period. Any excess should be amortized to the next call date.

ASU 2020-08 is effective for public business entities for fiscal years starting after December 15, 2020 and for all other entities for fiscal years starting after December 15, 2021. Early adoption is allowed. Entities should apply the amendments on a prospective basis beginning in the period of adoption.

The full text of ASU 2020-08 is available here.