The GASB issued an Exposure Draft, Derivative Instruments: Application of Hedge Accounting Termination Termination Provisions, an amendment of GASB No. 53. The ED clarifies the application requirements in Statement No. 53 which address the termination of hedge accounting.
It clarifies what constitutes a termination event for accounting and financial reporting purposes.
The need for clarity is necessary to address quesions with regard to the application of the termination provisions in Statement 53 when a counterparty or a counterparty's credit support provider of an interest rate swap or commodity swap is replaced because the original counterparty, or counterparty's credit support provider, failed to comply with the specific terms of a swap agreement.
The proposed effective date would be for financial statement periods beginning after June 15, 2011. The ED comment deadline is April 15, 2011.
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