Accounting Standards Update · 2022
ASU 2022-05 — Financial Services—Insurance (Topic 944): Transition for Sold Contracts
The amendments in this Update modify the current application requirements of Accounting Standards Update No. 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI). The amendments in this Update amend the LDTI transition guidance to allow an insurance entity to make an accounting policy election on a transaction-by-transaction basis. An insurance entity may elect to exclude contracts that meet certain criteria from applying the amendments in Update 2018-12. To qualify for the accounting policy election, as of the LDTI effective date both of the following conditions must be met:
- 1 The insurance contracts must have been derecognized because of a sale or disposal of individual or a group of contracts or legal entities
- 2 The entity has no significant continuing involvement with the derecognized contracts.
This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2022-003—Financial Services—Insurance (Topic 944): Transition for Sold Contracts, which has been deleted.
Issued: December 15, 2022
Text as published in the FASB Accounting Standards Codification, Basic View.