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FASB ASC 825 creates a fair value option under which an organization may irrevocably elect fair value as the initial and subsequent measure for many financial instruments and certain other items that are not already required to be reported at fair value, with changes in fair value recognized in the statement of activities as those changes occur. An election is made on an instrument-by-instrument basis (with certain exceptions), generally when an instrument is initially recognized in the financial statements. Additional disclosures are required for entities that make the fair value election.

FASB ASC 825 also requires the following financial instruments general disclosures:

 In the body of the financials or in the accompanying notes, the fair value of financial instruments for which it is practicable to estimate fair value

 The method(s) and significant assumptions used to estimate the fair value of financial instruments consistent with the requirements of “Pending Content” in FASB ASC 820-10-50-2(bbb), except that a reporting entity is not required to provide the quantitative disclosures about significant unobservable inputs used in fair value measurements of investments held by an employee benefit plan in the plan sponsor’s own private company stock categorized within Level 3 of the fair value hierarchy required by that paragraph

 A description of the changes in the method(s) and significant assumptions used to estimate the fair value of financial instruments, if any, during the period

 The level of the fair value hierarchy within which the fair value measurements are categorized in their entirety

For financial instruments recognized at fair value, the disclosure requirements of FASB ASC 820 also apply.

The requirement to disclose the hierarchy level does not apply to nonpublic entities for items that are not measured at fair value in the statement of financial position but for which fair value is disclosed.

These disclosures are required for all entities but are optional for a plan that meets all of the following criteria: the plan is nonpublic, total assets are less than $100 million on the financial statement date, and no instrument is accounted for as a derivative under FASB ASC 815, Derivatives and Hedging.

Note: As discussed in the Recent Developments section of this chapter, FASB ASC 825 was also amended.

Help desk. Participant loans, which are reported at cost, would have fallen under this requirement to disclose fair value and consequently the hierarchy level because they are financial instruments; however, they have been specifically scoped out of these FASB ASC 825 disclosures.

See FASB ASC 825 for further guidance, including presentation and disclosure requirements.