Introduction to Derivatives
- Forwards and futures contracts
- Interest rate swaps
- Options
Fundamental Concepts of ASC 815 (Derivatives and Hedging)
- Background and overview of ASC 815
- The four cornerstones of accounting for derivatives and hedging
- The accounting definition of “derivative” — and why we care
- Key terms and concepts
“Fair Value” and “Cash Flow” Hedge Accounting
- Definitions
- Purpose
- Qualifying criteria
- Documentation requirements
- Overview of common examples
- Comparing cash flow hedges to fair value hedges
Foreign Currency Hedges
- Unique exceptions available for foreign currency hedges
- Additional qualifying criteria
- Overview of common examples
- Intercompany arrangements
- Hedging a net investment in foreign operations
Hedge Effectiveness Testing and Measurement
- Required assessments
- Excludable components when assessing hedge effectiveness
- Common causes of ineffectiveness
- Dealing with ineffectiveness
Embedded Derivatives
- Determining when to bifurcate an embedded derivative from its “host” contract
- The “clearly and closely related” criteria
- Examples
Overview of Disclosure Requirements
- Notes to the financial statements
- Market risk disclosures
- MD&A