RELIEF ON THE WAY FOR
FINANCIAL INSTRUMENT
DISCLOSURES

The FASB is close to amending disclosure rules on fair value of financial instruments to exclude certain small, nonpublic companies from requiring such disclosures.

With FASB Statement No. 107, Disclosures About Fair Value of Financial Instruments, now effective for entities with less than $150 million in total assets for financial statements with fiscal years ending after December 15, 1995, there has been much concern for smaller entities. Estimation of fair value in applying FASB No. 107 has been one of the more challenging tasks.

During the three- year transitional period small entities had for preparing for the requirements of FASB No. 107, several groups have made an effort to make the transitional exemption for firms having $150 million or less in assets, a permanent exemption.

FASB currently has on its agenda a proposal that would amend the rules to make the disclosure optional for entities that meet the following three criteria:

* The enterprise is nonpublic;

* The entity's total assets are less than $10 million on the date of the financial statements; and,

* During the period covered by the financial statements, the entity did not hold or issue any derivative financial instrument, as defined in FASB Statement No. 119, Disclosures About Derivative Financial Instruments and Fair Value of Financial Instruments.

The proposed amendment to FASB No. 107, if approved, will be effective upon issuance of a final statement, which is expected before the end
of 1996. *