Investment Companies to Include Contractual Sale Restrictions in Fair Value of Equity Securities
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The Financial Accounting Standards Board (FASB) has issued Accounting Standards Update (ASU) 2026-03, Fair Value Measurement (Topic 820): Investment Companies with Equity Securities Subject to Contractual Sale Restrictions. The update is a narrow exception to ASC 820, Fair Value Measurement, applying only to investment companies within the scope of ASC 946, Financial Services — Investment Companies. It requires investment companies within the scope of ASC 946 to consider contractual sale restrictions when measuring the fair value of equity securities in accordance with ASC 820. (Other entities must continue to exclude contractual sale restrictions from fair value.) It also requires investment companies to disclose the amount of the discount attributable to the restriction.