Accounting and Disclosure for Derivative Instruments (Portfolio 5112)

Description

Tax Management Portfolio 5112-4th, Accounting and Disclosure for Derivatives and Hedging Instruments, examines how an entity accounts for derivatives and hedging activities under authoritative generally accepted accounting principles (GAAP) set out in the Financial Accounting Standards Board’s Accounting Standards Codification® (ASC).

This manuscript does all of the following:

• Synthesizes the existing authoritative guidance as set primarily in ASC 815, Derivatives and Hedging;
• Offers insight into the rationale for, and practical consequences of, the authoritative guidance;
• Provides context for and observations about illustrative examples set out in the authoritative guidance; and
• Includes practical points (“Bloomberg Tax & Accounting Note”) that further enhance the understanding, application, and implementation of the authoritative guidance.

The analysis is drawn from review of the authoritative guidance, but also from the supporting project materials of the International Accounting Standards Board—for example, the basis for board’s conclusions and related dissents, exposure drafts, comment letters, and other project documentation.

This Portfolio may be cited as Tax Management Portfolio 5112-4th, Georgiades, Accounting and Disclosure for Derivatives and Hedging Instruments.

Table of Contents

I. Overview

II. Introduction to Derivatives

III. Definition of Derivative and Scope of ASC 815

IV. Accounting for Derivative Instruments Not Designated as Hedges

V. Hedge Accounting

VI. Hedge Effectiveness

VII. U.S. GAAP Disclosure Requirements

VIII. U.S. Securities and Exchange Commission Disclosure Requirements