FASB updates investment company fair value reporting standard

An ASU issued by FASB aims to improve how investment companies measure the fair value of an equity security that is subject to a contractual sale restriction.

FASB said in a news release that for investment companies within the scope of Topic 946, Financial Services — Investment Companies, the amendments in the ASU provide an exception to Topic 820, Fair Value Measurement, requiring that a contractual restriction on the sale of an equity security be considered in measuring the fair value of the equity security.

The amendments also require those investment companies to disclose the amount of the discount attributable to the contractual sale restriction.

The amendments will go into effect for annual reporting periods beginning after Dec. 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted. Read more.