U.S. GAAP Codification of Accounting Standards Guide by AccountingINFO.com

U.S. GAAP Codification of Accounting Standards

U.S. GAAP Codification of Accounting Standards
Codification Topic 825: Financial Instruments

Principles of Accounting, Intermediate Accounting, Advanced Accounting

Codification Topic 825
Financial Instruments

Fair Value Option

   SFAS No. 159, February 2007
   " The Fair Value Option for Financial Assets and Financial Liabilities"

   Fair Value Option(FVO)
   --> Option to measure eligible items at fair value

   Eligible items: asc 825-10-15-4
   (a) Financial assets and financial liabilities
         --> except the items not eligible listed in asc 825-10-15-4
   (b) Other eligible items listed in asc 825-10-15-4

   Items not eligible: asc 825-10-15-5
   (a) Investment in a subsidiary to be consolidated
   (b) Investment in a Variable Interest Entities (VIE) to be consolidated
   (c) Other items listed in asc 825-10-15-5

Election of FVO

   FVO is applied "instrument by instrument."

   FVO is elected when the eligible item is "first recognized."

   Once FVO is elected
   --> the decision is "irrevocable."

Items Fair Value Option was elected for

   Measured at "fair value"

   Unrealized gains and losses are recognized in "earnings."

FVO may be elected for the following:

   1. Investment in HTM securities
   2. Investment in AFS securities
   3. Investment in equity securities for "equity method"
    --> 20% or more, but no more than 50% of ownership
   4. Financial liabilities

   HTM: Held-to-Maturity
   AFS: Available for Sale

   For HTM and AFS, refer to asc 320

Codification Topic 825
Financial Instruments

Subtopics of Codification Topic 825

825-10 Overall
825-20 Registration payment arrangements

Accounting Terms of Codification Topic 825-10

   Conduit debt securities
   Fair value
   Financial asset
   Financial instrument
   Financial liability
   Firm commitment
   Nonpublic entity
   Publicly traded company

Accounting Terms of Codification Topic 825-20