The General Subsection of this Section establishes the pervasive scope for this Subtopic, with specific exceptions noted in the other Subsections of this Section.
The guidance in this Subtopic applies to all entities.
The Fair Value Option Subsections follow the same Scope and Scope Exceptions as outlined in the General Subsection of this Subtopic, with specific qualifications and exceptions noted below.
No entity may elect the fair value option for any of the following financial assets and financial liabilities: - a
An investment in a subsidiary that the entity is required to consolidate.
- b
An interest in a variable interest entity (VIE) that the entity is required to consolidate.
- c
Employers' and plans' obligations (or assets representing net overfunded positions) for pension benefits, other postretirement benefits (including health care and life insurance benefits), postemployment benefits, employee stock option and stock purchase plans, and other forms of deferred compensation arrangements, as defined in Topics 420; 710; 712; 715; 718; and 960. - d
Financial assets and financial liabilities recognized under leases as defined in Subtopic 842-10. (This exception does not apply to a guarantee of a third-party lease obligation or a contingent obligation arising from a cancelled lease.) - e
Deposit liabilities, withdrawable on demand, of banks, savings and loan associations, credit unions, and other similar depository institutions.
- f
Financial instruments that are, in whole or in part, classified by the issuer as a component of shareholders' equity (including temporary equity).
(P) December 16, 2027; (N) December 16, 2028
818-10-65-1No entity may elect the fair value option for any of the following financial assets and financial liabilities: - a
An investment in a subsidiary that the entity is required to consolidate.
- b
An interest in a variable interest entity (VIE) that the entity is required to consolidate.
- c
Employers' and plans' obligations (or assets representing net overfunded positions) for pension benefits, other postretirement benefits (including health care and life insurance benefits), postemployment benefits, employee stock option and stock purchase plans, and other forms of deferred compensation arrangements, as defined in Topics 420; 710; 712; 715; 718; and 960. - d
Financial assets and financial liabilities recognized under leases as defined in Subtopic 842-10. (This exception does not apply to a guarantee of a third-party lease obligation or a contingent obligation arising from a cancelled lease.) - e
Deposit liabilities, withdrawable on demand, of banks, savings and loan associations, credit unions, and other similar depository institutions.
- f
Financial instruments that are, in whole or in part, classified by the issuer as a component of shareholders' equity (including temporary equity).
- g
The Fair Value Option Subsections:
- a
Do not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value
- b
Do not establish requirements for recognizing and measuring dividend income, interest income, or interest expense
- c
Do not eliminate disclosure requirements included in other Subtopics, including requirements for disclosures about fair value measurements included in Topic 820.
Not-for-profit entities (NFPs) shall apply the provisions of the Fair Value Option Subsections with the following modifications: - a
References to an income statement shall be replaced with references to a statement of activities, statement of changes in net assets, or statement of operations.
- b
References to earnings shall be replaced with references to changes in net assets, except as indicated in (c).
- c
Paragraph 954-825-45-1 explains that health care entities subject to Topic 954 shall report unrealized gains and losses on items for which the fair value option has been elected within the performance indicator or as a part of discontinued operations, as appropriate. Unlike other NFPs, health care entities subject to that Topic present performance indicators analogous to income from continuing operations. Consistent with the provisions of Subtopic 958-10, NFPs may present such gains and losses either within or outside of other intermediate measures of operations unless such gains or losses are part of discontinued operations. This includes intermediate measures of operations presented by NFPs other than health care entities and any additional intermediate measures of operations presented within the performance indicator by not-for-profit health care entities. - d
The disclosure requirements in paragraph 825-10-50-30 shall apply not only with respect to the effect on performance indicators or other intermediate measures of operations, if presented, but also with respect to the effect on the change in each of the net asset classes (without donor restrictions or with donor restrictions), as applicable.
(P) December 16, 2026; (N) December 16, 2026
105-10-65-10Not-for-profit entities (NFPs) shall apply the provisions of the Fair Value Option Subsections with the following modifications: - a
References to an income statement shall be replaced with references to a statement of activities, statement of changes in net assets, or statement of operations.
- b
References to earnings shall be replaced with references to changes in net assets, except as indicated in (c).
- c
Paragraph 954-825-45-1 explains that health care entities subject to Topic 954 shall report unrealized gains and losses on items for which the fair value option has been elected within the performance indicator or as a part of discontinued operations, as appropriate. Unlike other NFPs, health care entities subject to that Topic present performance indicators analogous to income from continuing operations. Consistent with the provisions of paragraphs , NFPs may present such gains and losses either within or outside of other intermediate measures of operations unless such gains or losses are part of discontinued operations. This includes intermediate measures of operations presented by NFPs other than health care entities and any additional intermediate measures of operations presented within the performance indicator by not-for-profit health care entities. - d
The disclosure requirements in paragraph 825-10-50-30 shall apply not only with respect to the effect on performance indicators or other intermediate measures of operations, if presented, but also with respect to the effect on the change in each of the net asset classes (without donor restrictions or with donor restrictions), as applicable.