A new Accounting Standards Update (ASU) issued by FASB aims to better align hedge accounting with an organization’s risk management strategies.
The ASU expands the current single-layer hedging model to allow multiple-layer hedges on a single closed portfolio of prepayable financial assets or one or more beneficial interests secured by a portfolio of prepayable financial instruments under the method.
Due to the expansion, FASB renamed the last-of-layer method as the portfolio-layer method. The ASU applies to all entities that choose to apply the hedge accounting portfolio-layer method. Read more.