Derivatives & Hedging Activities

Overview

A derivative is a financial product that derives its value based on an underlying asset, liability or other variable. Hedging is a form of investment to protect another investment. Derivatives have become popular tools for "hedging" (i.e. reducing) financial risk; they have also become an increasingly standard item on big companies' balance sheets. Yet understanding how they work, what they are used for and how they can affect the bottom line of a business has proven to be a significant challenge for the accounting and auditing industries. 

This course provides an overview of the financial accounting and reporting requirements related to derivatives and hedging activities. Accounting and financial reporting requirements related to these activities are prescribed within ASC Topic 815. The focus of this course is primarily related to the overall accounting requirements related to derivatives, with additional emphasis on fair value, cash flow, and net investment hedges. 

Learning Objectives

Upon completion of this course, students will be able to:

  • identify the appropriate U.S. GAAP guidance related to derivates and hedging activities
  • recognize key characteristics of derivative instruments including measurement requirements identify items that are within the scope of ASC Topic 815
  • recognize considerations related to embedded derivatives
  • identify overall principles and requirements related to hedge accounting
  • differentiate between types of hedge transactions recognize methods used for testing hedge effectiveness
  • identify overall financial statement disclosure requirements related to derivatives and hedging
  • recognize recent developments impacting accounting for derivatives and hedging activities

Designed For

Practicing CPAs, both in public accounting and business and industry -- controllers, accountants, and other financial accounting personnel 
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