Paragraph
825-10-05-3 identifies various Topics within the Codification that address financial instruments matters. Those and other Topics in the Codification require disclosures about specific financial instruments. This Subsection addresses incremental disclosures about all of the following:
- a
- b
Concentrations of credit risk of all financial instruments
- c
Market risk of all financial instruments.
This guidance discusses the applicability of the disclosure requirements in this Subsection to entities and transactions.
Generally accepted accounting principles (GAAP) require disclosure of or subsequent measurement at fair value for many classes of financial instruments. Those requirements are not superseded or modified by this Subsection.
A reporting entity shall disclose
either in the body of the financial statements or in the accompanying notes, the fair value of financial instruments and the level of the fair value hierarchy within which the fair value measurements are categorized in their entirety (Level 1, 2, or 3).- a
- b
- c
- d
For financial instruments recognized at fair value in the statement of financial position, the disclosure requirements of Topic 820 also apply.(P) December 16, 2027; (N) December 16, 2028
270-10-65-1For interim and annual reporting periods, a reporting entity shall disclose
either in the body of the financial statements or in the accompanying notes, the fair value of financial instruments and the level of the fair value hierarchy within which the fair value measurements are categorized in their entirety (Level 1, 2, or 3).- a
- b
- c
- d
For financial instruments recognized at fair value in the statement of financial position, the disclosure requirements of Topic 820 also apply.Fair value disclosed in the notes shall be presented together with the related carrying amount in a form that clarifies both of the following: - a
Whether the fair value and carrying amount represent assets or liabilities
- b
How the carrying amounts relate to what is reported in the statement of financial position.
(P) December 16, 2027; (N) December 16, 2028
270-10-65-1For interim and annual reporting periods, fair value disclosed in the notes shall be presented together with the related carrying amount in a form that clarifies both of the following: - a
Whether the fair value and carrying amount represent assets or liabilities
- b
How the carrying amounts relate to what is reported in the statement of financial position.
If the fair value of financial instruments is disclosed in more than a single note, one of the notes shall include a summary table. The summary table shall contain the fair value and related carrying amounts and cross-references to the location(s) of the remaining disclosures required by this Section.
(P) December 16, 2027; (N) December 16, 2028
270-10-65-1If the fair value of financial instruments is disclosed in more than a single note, one of the notes shall include a summary table in interim and annual reporting periods. The summary table shall contain the fair value and related carrying amounts and cross-references to the location(s) of the remaining disclosures required by this Section. This Subtopic does not prohibit an entity from disclosing separately the estimated fair value of any of its nonfinancial intangible and tangible assets and nonfinancial liabilities.
Except as indicated in paragraph 825-10-50-22, an entity shall disclose all significant concentrations of credit risk arising from all financial instruments, whether from an individual counterparty or groups of counterparties. Throughout paragraphs 825-10-50-20 through 50-21, the term financial instruments includes derivative instruments accounted for under Topic 815. Group concentrations of credit risk exist if a number of counterparties are engaged in similar activities and have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. (P) December 16, 2027; (N) December 16, 2028
270-10-65-1For interim and annual reporting periods, except as indicated in paragraph 825-10-50-22, an entity shall disclose all significant concentrations of credit risk arising from all financial instruments, whether from an individual counterparty or groups of counterparties. Throughout paragraphs 825-10-50-20 through 50-21, the term financial instruments includes derivative instruments accounted for under Topic 815. Group concentrations of credit risk exist if a number of counterparties are engaged in similar activities and have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. Except as indicated in paragraph 825-10-50-22, all of the following shall be disclosed about each significant concentration: - a
Information about the (shared) activity, region, or economic characteristic that identifies the concentration
- b
The maximum amount of loss due to credit risk that, based on the gross fair value of the financial instrument, the entity would incur if parties to the financial instruments that make up the concentration failed completely to perform according to the terms of the contracts and the collateral or other security, if any, for the amount due proved to be of no value to the entity
- c
With respect to collateral, all of the following:
- 1
The entity's policy of requiring collateral or other security to support financial instruments subject to credit risk
- 2
Information about the entity's access to that collateral or other security
- 3
The nature and a brief description of the collateral or other security supporting those financial instruments.
- d
With respect to master netting arrangements, all of the following:
- 1
The entity's policy of entering into master netting arrangements to mitigate the credit risk of financial instruments
- 2
Information about the arrangements for which the entity is a party
- 3
A brief description of the terms of those arrangements, including the extent to which they would reduce the entity's maximum amount of loss due to credit risk.
(P) December 16, 2027; (N) December 16, 2028
270-10-65-1For interim and annual reporting periods, except as indicated in paragraph 825-10-50-22, all of the following shall be disclosed about each significant concentration: - a
Information about the (shared) activity, region, or economic characteristic that identifies the concentration
- b
The maximum amount of loss due to credit risk that, based on the gross fair value of the financial instrument, the entity would incur if parties to the financial instruments that make up the concentration failed completely to perform according to the terms of the contracts and the collateral or other security, if any, for the amount due proved to be of no value to the entity
- c
With respect to collateral, all of the following:
- 1
The entity's policy of requiring collateral or other security to support financial instruments subject to credit risk
- 2
Information about the entity's access to that collateral or other security
- 3
The nature and a brief description of the collateral or other security supporting those financial instruments.
- d
With respect to master netting arrangements, all of the following:
- 1
The entity's policy of entering into master netting arrangements to mitigate the credit risk of financial instruments
- 2
Information about the arrangements for which the entity is a party
- 3
A brief description of the terms of those arrangements, including the extent to which they would reduce the entity's maximum amount of loss due to credit risk.
This guidance discusses the applicability of the disclosure requirements in this Subsection to all entities that have elected the fair value option.
As of each date for which a statement of financial position is presented, entities shall disclose all of the following: - a
Management's reasons for electing a fair value option for each eligible item or group of similar eligible items
- b
If the fair value option is elected for some but not all eligible items within a group of similar eligible items, both of the following:
- 1
A description of those similar items and the reasons for partial election
- 2
Information to enable users to understand how the group of similar items relates to individual line items on the statement of financial position.
- c
For each line item in the statement of financial position that includes an item or items for which the fair value option has been elected, both of the following:
- 1
Information to enable users to understand how each line item in the statement of financial position relates to major classes of assets and liabilities presented in accordance with the fair value disclosure requirements of Topic 820. (Paragraph 825-10-50-11 also requires an entity to relate carrying amounts that are disclosed in accordance with that paragraph to what is reported in the statement of financial position.) - 2
The aggregate carrying amount of items included in each line item in the statement of financial position that are not eligible for the fair value option, if any.
- d
The difference between the aggregate fair value and the aggregate unpaid principal balance of each of the following:
- 1
Loans and long-term receivables (other than securities subject to Topic 320) that have contractual principal amounts and for which the fair value option has been elected - 2
Long-term debt instruments that have contractual principal amounts and for which the fair value option has been elected.
- e
For loans held as assets for which the fair value option has been elected, all of the following:
- 1
The aggregate fair value of loans that are 90 days or more past due
- 2
If the entity's policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status
- 3
The difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both.
- f
For investments that would have been accounted for under the equity method if the entity had not chosen to apply the fair value option, the information required by paragraph 323-10-50-3 (excluding the disclosures in paragraph 323-10-50-3(a)(3); (b); and (d)).
(P) December 16, 2027; (N) December 16, 2028
270-10-65-1As of each date for which an interim or annual statement of financial position is presented, entities shall disclose all of the following: - a
Management's reasons for electing a fair value option for each eligible item or group of similar eligible items
- b
If the fair value option is elected for some but not all eligible items within a group of similar eligible items, both of the following:
- 1
A description of those similar items and the reasons for partial election
- 2
Information to enable users to understand how the group of similar items relates to individual line items on the statement of financial position.
- c
For each line item in the statement of financial position that includes an item or items for which the fair value option has been elected, both of the following:
- 1
Information to enable users to understand how each line item in the statement of financial position relates to major classes of assets and liabilities presented in accordance with the fair value disclosure requirements of Topic 820. (Paragraph 825-10-50-11 also requires an entity to relate carrying amounts that are disclosed in accordance with that paragraph to what is reported in the statement of financial position.) - 2
The aggregate carrying amount of items included in each line item in the statement of financial position that are not eligible for the fair value option, if any.
- d
The difference between the aggregate fair value and the aggregate unpaid principal balance of each of the following:
- 1
Loans and long-term receivables (other than securities subject to Topic 320) that have contractual principal amounts and for which the fair value option has been elected - 2
Long-term debt instruments that have contractual principal amounts and for which the fair value option has been elected.
- e
For loans held as assets for which the fair value option has been elected, all of the following:
- 1
The aggregate fair value of loans that are 90 days or more past due
- 2
If the entity's policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status
- 3
The difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both.
- f
For investments that would have been accounted for under the equity method if the entity had not chosen to apply the fair value option, the information required by paragraph 323-10-50-3 (excluding the disclosures in paragraph 323-10-50-3(a)(3); (b); and (d)).
For each period for which an income statement is presented, entities shall disclose all of the following about items for which the fair value option has been elected: - a
For each line item in the statement of financial position, the amounts of gains and losses from fair value changes included in earnings during the period and in which line in the income statement those gains and losses are reported. This Subtopic does not preclude an entity from meeting this requirement by disclosing amounts of gains and losses that include amounts of gains and losses for other items measured at fair value, such as items required to be measured at fair value.
- b
A description of how interest and dividends are measured and where they are reported in the income statement. This Subtopic does not address the methods used for recognizing and measuring the amount of dividend income, interest income, and interest expense for items for which the fair value option has been elected.
- c
For loans and other receivables held as assets, both of the following:
- 1
The estimated amount of gains or losses included in earnings during the period attributable to changes in instrument-specific credit risk
- 2
How the gains or losses attributable to changes in instrument-specific credit risk were determined.
- d
For liabilities, all of the following about the effects of the instrument-specific credit risk and changes in it:
- 1
The amount of change, during the period and cumulatively, of the fair value of the liability that is attributable to changes in the instrument-specific credit risk
- 2
- 3
How the gains and losses attributable to changes in instrument-specific credit risk were determined.
- 4
If a liability is settled during the period, the amount, if any, recognized in other comprehensive income that was recognized in net income at settlement.
(P) December 16, 2027; (N) December 16, 2028
270-10-65-1For each interim or annual period for which an income statement is presented, entities shall disclose all of the following about items for which the fair value option has been elected: - a
For each line item in the statement of financial position, the amounts of gains and losses from fair value changes included in earnings during the period and in which line in the income statement those gains and losses are reported. This Subtopic does not preclude an entity from meeting this requirement by disclosing amounts of gains and losses that include amounts of gains and losses for other items measured at fair value, such as items required to be measured at fair value.
- b
A description of how interest and dividends are measured and where they are reported in the income statement. This Subtopic does not address the methods used for recognizing and measuring the amount of dividend income, interest income, and interest expense for items for which the fair value option has been elected.
- c
For loans and other receivables held as assets, both of the following:
- 1
The estimated amount of gains or losses included in earnings during the period attributable to changes in instrument-specific credit risk
- 2
How the gains or losses attributable to changes in instrument-specific credit risk were determined.
- d
For liabilities, all of the following about the effects of the instrument-specific credit risk and changes in it:
- 1
The amount of change, during the period and cumulatively, of the fair value of the liability that is attributable to changes in the instrument-specific credit risk
- 2
- 3
How the gains and losses attributable to changes in instrument-specific credit risk were determined.
- 4
If a liability is settled during the period, the amount, if any, recognized in other comprehensive income that was recognized in net income at settlement.
In annual periods only, an entity shall disclose the methods and significant assumptions used to estimate the fair value of items for which the fair value option has been elected. For required disclosures about the method(s) and significant assumptions used to estimate the fair value of financial instruments, see paragraph
820-10-50-2(bbb) except that an entity is not required to provide the quantitative disclosures about significant unobservable inputs used in fair value measurements categorized within Level 3 of the fair value hierarchy required by that paragraph. (P) December 16, 2027; (N) December 16, 2028
270-10-65-1In interim and annual periods, an entity shall disclose the methods and significant assumptions used to estimate the fair value of items for which the fair value option has been elected. For required disclosures about the method(s) and significant assumptions used to estimate the fair value of financial instruments, see paragraph
820-10-50-2(bbb) except that an entity is not required to provide the quantitative disclosures about significant unobservable inputs used in fair value measurements categorized within Level 3 of the fair value hierarchy required by that paragraph. If an entity elects the fair value option at the time one of the events in paragraph 825-10-25-4(d) through (e) occurs, the entity shall disclose both of the following in financial statements for the period of the election: - a
Qualitative information about the nature of the event
- b
Quantitative information by line item in the statement of financial position indicating which line items in the income statement include the effect on earnings of initially electing the fair value option for an item.
(P) December 16, 2027; (N) December 16, 2028
270-10-65-1If an entity elects the fair value option at the time one of the events in paragraph 825-10-25-4(d) through (e) occurs, the entity shall disclose both of the following in interim and annual financial statements for the period of the election: - a
Qualitative information about the nature of the event
- b
Quantitative information by line item in the statement of financial position indicating which line items in the income statement include the effect on earnings of initially electing the fair value option for an item.