Libor’s Demise Prompts Guidance to Ease Accounting Headaches

U.S. accounting rulemakers are offering guidance to avoid financial reporting turmoil when the world’s most popular benchmark interest rate goes away by the end of 2021.

The Financial Accounting Standards Board released a plan on Sept. 5 aimed at easing how to modify contracts and risk management techniques called hedges that reference the London Interbank Offered Rate (Libor), the rate tied to trillions of dollars of loans and derivatives around the globe.

Under the proposal, if a loan, lease, or debt contract has to be changed to insert a new interest rate, the modification would be accounted for as a ...