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To the Point - FASB provides accounting relief for the transition away from LIBOR and certain other reference rates

Overview

The FASB issued guidance to provide temporary optional expedients and exceptions to the US GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (SOFR). The guidance is effective upon issuance and may be adopted on any date on or after 12 March 2020. However, the relief is temporary and generally cannot be applied to contract modifications that occur after 31 December 2022 or hedging relationships entered into or evaluated after that date.

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