ASC 820 Disclosure Requirements

Do you have questions about your ASC 820 disclosures? DerivActiv can help. Since its inception in 2004, DerivActiv has been providing independent, objective, and defensible values of derivatives and financial securities that meet accounting and regulatory requirements.

DerivActiv takes an active role in preparing reports acceptable to clients and their audit firms. The methodologies that we use to arrive at fair value, as defined by ASC 820, have been vetted and accepted by national, regional and local audit firms across the country.

If you need your ASC 820 questions answered, call a knowledgeable professional at DerivActiv:  1-866-200-9012.

ASC 820 Disclosure Levels

Under ASC 820 requirements for disclosure are different depending upon how a security is classified under the fair value hierarchy. The levels within the hierarchy show users of financial statements the degree of objectivity or certainty around the valuation of a particular asset or liability. Securities classified as Level 1 inputs require the least amount of disclosure because Level 1 inputs are directly observable and very certain. Securities classified as Level 3 inputs however, actually have expanded disclosure requirements under ASC 820 due to the subjectivity and less certainty of valuations.

The following is a brief overview of disclosure required under ASC 820:

ASC 820 states that for each interim and annual period, the entity is required to report for assets and liabilities measured in terms of fair values on a recurring basis the following information:

1. fair value measurements;
2. the level in the hierarchy in which these measurements are placed;
3. for Level 3 unobservable inputs, a reconciliation of beginning and ending balances showing realized and unrealized gains and losses, purchases, sales, issuances, and settlements;
4. the gains and losses from (3) included in earnings due to changes in the unrealized gains and losses in the assets and liabilities in question; and
5. for annual periods, the valuation techniques used and a discussion of any changes in those techniques.

ASC 820 states that disclosures required for assets and liabilities valued on a nonrecurring basis are as follows:

1. fair value measurements and reasons for them;
2. hierarchy level of those measurements;
3. for Level 3 inputs, a description and the information employed to obtain them;
4. for annual periods, the valuation techniques used and a discussion of any changes in those techniques.

If you are interested in learning more about ASC 820 (formerly FAS 157), you can download a ASC 820 white paper.

To speak to an ASC 820 expert, call 1-866-200-9012.