The FASB issued a proposed ASU that is intended to ease the potential accounting burden as it relates to reference rate reform. In light of the risk of the cessation of the London Interbank Offered Rate (LIBOR) and global regulatory efforts toward reference rate reform, the FASB has proposed a number of optional expedients and exceptions for contracts, hedging relationships and other transactions that are likely to be impacted by reference rate reform.

The intention of these temporary provisions is to allow entities to treat contract modifications related to reference rate reform as a continuation of the existing contracts when certain criteria are met. Generally, this means that entities would account for the modifications on a prospective basis and would not be required to reassess or remeasure the existing contracts or to reassess hedging relationships.

The proposed amendment would be effective upon issuance of the final ASU and the provisions would be applied prospectively at the adoption date through December 31, 2022.

Comments are due on this Exposure Draft to the FASB by October 7, 2019. The full text of the Exposure Draft is available here.

^{Readers should not act upon information presented without individual professional consultation.}