Capital Markets Accounting Developments Advisory 2010-5
May 2010
At a glance
The FASB issued an Accounting Standards Update (ASU) that amends and clarifies the guidance on how entities should evaluate credit derivatives embedded in beneficial interests ("BI") in securitized financial assets.
May 10, 2010
FASB amends exception for credit derivatives embedded in securitized financial assets: A summary of ASU 2010-11
The FASB issued an Accounting Standards Update (ASU) that amends and clarifies the guidance on how entities should evaluate credit derivatives embedded in beneficial interests ("BI") in securitized financial assets. More financial instruments will now be accounted for at fair value through earnings. The updated guidance eliminates the scope exception for bifurcation of embedded credit derivatives in interests in securitized financial assets unless they are created solely by subordination of one BI to another.
Entities must adopt the new guidance by the first day of the first fiscal quarter beginning after June 15, 2010. Early adoption is permitted.
The update allows entities to elect the fair value option for any BI in securitized financial assets upon adoption.