Derivatives and Hedging: Making Sense of the Complex Guidance in Topic 815
Thursday, December 1, 2022
Derivatives continue to serve as a very effective method for entities to hedge their business risks. However, due to very complex accounting rules, many entities choose to not take advantage of this opportunity to reduce their exposure to interest rate, currency exchange, and general market risks that they encounter in running their businesses.
In this course, we will review the basic accounting model for derivatives, focusing on the reasons why entities enter into such arrangements, risks hedged, and the basic derivative and hedge accounting models. We will then review cash flow, fair value, and net investment hedging strategies and explore in depth the documentation and other requirements necessary in order to obtain hedge accounting treatment for these types of transactions. Lastly, we will review the recent changes to the hedge accounting model brought about by recent FASB Updates on this topic.
While accounting for derivatives and hedges will continue to be very challenging and often confusing, this course will help demystify this guidance and aid you in integrating these financial instruments into your risk management strategies.
- Recall common derivative instruments and their uses
- Recall the accounting guidance in accounting for derivative financial instruments
- Discuss common hedging strategies and how to account for them
- Apply hedge accounting guidance found in ASC 815
- Recall proposed changes to the hedge accounting model in ASC 815
- Common derivative financial instruments and their uses
- Accounting guidance for derivatives
- Common hedging strategies and how to account for them
- Recent changes to the hedging accounting model under Topic 815