Financial Reporting Alert 08-9, Clarification of the Effective Date of FASB Statement No. 161
May 21, 2008
FASB Statement No. 161, Disclosures About Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133, was issued in March 2008 and requires entities to provide enhanced disclosures regarding their derivative instruments and hedging activities (see Deloitte’s March 27, 2008, Heads Up on Statement 161). Recently, some have raised questions about the language defining the effective date and whether the disclosure requirements in Statement 161 are effective for financial statements issued for (1) fiscal years that begin after November 15, 2008, and interim periods in those fiscal years or (2) the first fiscal period (i.e., interim period) that begins after November 15, 2008, regardless of whether that fiscal period is the first interim period in the entity’s fiscal year.
Paragraph 7 of Statement 161 specifies that the Statement is "effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008" (emphasis added). Accordingly, an entity must provide the disclosures required by Statement 161 in its first set of financial statements issued for a reporting period that begins after November 15, 2008, regardless of whether that reporting period is the first interim period in the entity’s fiscal year.
Statement 161 also permits and encourages early application.
Entity ABC's fiscal year ends on September 30, 2008. Entity ABC must provide Statement 161 disclosures in its interim financial statements for the three months ended March 31, 2009, because ABC's second fiscal quarter, which began on January 1, 2009, is its first reporting period that begins after November 15, 2008.
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