Article
FASB proposal to amend investment company fair value reporting
July 6, 2026
The Financial Accounting Standards Board (FASB) issued a proposed Accounting Standards Update (ASU), Fair Value Measurement (Topic 820): Investment Companies with Equity Securities Subject to Contractual Sale Restrictions.
The proposed ASU would provide a limited exception to the fair value measurement guidance in Topic 820, Fair Value Measurement, for investment companies. Specifically, the proposed amendments would require investment companies to consider contractual sale restrictions when measuring the fair value of equity securities.
Stakeholders are encouraged to provide comments by July 17, 2026.
What is the scope of the proposed ASU?
The proposed amendments would apply to investment companies, as defined under Topic 946, Financial Services—Investment Companies, that have investments in equity securities measured at fair value and subject to contractual sale restrictions.
What are the key provisions of the proposed ASU 2022-03?
The amendments in ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, updated Topic 820 by clarifying that a contractual sale restriction should be excluded when measuring the fair value of an equity security. As a result, entities generally measure the fair value of a restricted equity security using the market price of an otherwise identical unrestricted security and don’t separately recognize the contractual sale restriction.
Following the implementation of ASU 2022-03, stakeholders have indicated that measuring the fair value of equity securities without considering contractual sale restrictions results in valuations that don’t reflect the value that market participants would place on those shares, particularly for investment companies. Stakeholders also noted that the current guidance can overstate net asset value (NAV), distort performance reporting and management fees, and create different outcomes for purchasing, redeeming, and remaining shareholders.