Wiley GAAP 2014: Interpretation and Application of Generally Accepted Accounting Principles

48   ASC 815 DERIVATIVES AND HEDGING

Perspective and Issues

Subtopics

Scope

Overview

Definitions of Terms

Concepts, Rules, and Examples

Financial Instruments

Types of financial assets

Exclusions

Derivative Financial Instruments

Accounting for Derivatives and Hedging Transactions per ASC 815: An Overview

Underlying principles

Embedded derivative instruments

Example of embedded instruments which are separately accounted for

Example of embedded instruments which are not separately accounted for

Hybrid financial instruments

Hedging Activities—General Requirements

Overview

Effectiveness—general observations

Fair Value Hedges

Qualifications

Reporting gains and losses from fair value hedges

Example—gains and losses on fair value hedges

Measuring the effectiveness of fair value hedges

Discontinuance of a fair value hedge

Ineffectiveness of a fair value hedge

Impairment considerations for hedging and hedged items

Example of applying fair value measurements in time of market inactivity or stress

Cash Flow Hedges

Qualifications

Gains and losses from cash flow hedges

Reclassifications to earnings

Example of a “plain vanilla” interest rate swap

Example of an option on interest rate swap

Effectiveness of cash flow hedges

Example of using options to hedge future purchase of inventory

Discontinuance of a cash flow hedge

Ineffectiveness of a cash flow hedge

Impairment

Expanded application of interest rate hedging

Foreign Currency Hedges

Foreign currency net investment hedge

Example of a foreign ...