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ASU 2015-07

The Financial Accounting Standards Board (FASB) recently issued ASU 2015-07 Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent).

Entities measuring investments at net asset value per share (NAV) as a practical expedient are no longer required to categorize such investments within the fair value hierarchy. The investments should still be included in the total column of the entity’s ACS 820 disclosure to permit reconciliation to amounts presented in the financial statements.

Certain disclosures continue to be required for each class of investment measured using the practical expedient to enable users to understand the nature and risks of investments measured at NAV:

  • Significant investment strategy;
  • General description of redemption terms and conditions;
  • Estimate of time required to liquidate the underlying assets of the investment, if required for redemption;
  • Reporting entity’s unfunded commitment;
  • Circumstances under which an otherwise redeemable investment might not be redeemable;
  • Any other significant restrictions on the reporting entity’s ability to sell the investment.

ASU 2015-07 is effective for fiscal years beginning after December 15, 2015.  Earlier application is permitted.

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