Chapter 26
Accounting for Derivatives: A Primer
26.2 Definition of a Derivative
26.4 Embedded Derivative Instruments
(i) Exposures That Qualify for Cash Flow Hedge Accounting
(iii) Prerequisite Requirements
(v) Internal Derivatives Contracts
(iii) Prerequisite Requirements
(c) Hedges of Net Investments in Foreign Operations
(e) Speculative Trades or Trades Not Qualifying for Hedge Accounting
26.7 International Financial Reporting Standards and Derivatives
26.8 Sources and Suggested References
26.1 Overview
It would be easy for us to dismiss [derivatives] as [investment products] only sophisticated investors use minimizing any impact to our economy.…If we think back to the collapse of Enron, or even farther back to Long-Term Capital Management, we understand how the abuse of derivatives can have a negative impact not only on the parties to the contract, but also on the market and the economy.
—Rep. Richard Neal, D-Mass., chairman of the House Ways and Means Select Revenue Measures Subcommittee, at a March 5 (2008) hearing on tax treatment of derivatives
Originally issued as Financial Accounting Statement (FAS) No. 133, Accounting ...
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