Dataline: Changes to Financial Instruments Accounting -- Impacts for Nonfinancial Services Companies (No. 2010-34)

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The FASB's proposal to change the accounting for financial instruments and hedge accounting could have broad implications to companies across all industries, including those in commercial and industrial industries. The proposed changes could result in a significant expansion of the use of fair value. Such changes would require greater valuation expertise and result in increased earnings volatility in many cases. Common instruments including investments in equity and debt instruments, accounts receivable and issuances of convertible debt, among others, would be affected. Companies should consider evaluating the impacts of the proposed changes now and consider providing feedback to the FASB on this very important proposal, which is open for comment through September 30, 2010. This Dataline discusses a few of the more common instruments and transactions that could be affected if proposed Accounting Standards Update, Accounting for Financial Instruments and Revisions to the Accounting for Derivative Instruments and Hedging Activities, is adopted in its current form.