1-0 Accounting for Derivative Instruments and Hedging Activities FASB Statement 133 October 12-13, 2000 Chicago, IL.

Slides:

Advertisements

Similar presentations

Accounting Principles, Eighth Edition

Advertisements

Overview of AS 30 Financial Inst. & Derivatives. Flow of presentation Overview of AS 30 Derivatives Financial Instruments Hedge Accounting Key Challenges.

Chapter 11 Multinational Accounting: Foreign Currency Transactions and Financial Instruments.

Proposed Accounting for Derivatives NASACT Audio Conference June 27, 2007.

Accounting and Financial Reporting for Derivative Instruments NASC Annual Conference March 25, 2009 Graylin E. Smith Managing Partner SB & Company, LLC.

Accounting for Bad Debts Allowance Method Accounts Receivable Approach Allowance Method Accounts Receivable Approach.

3-1 CASE 3 - Firm Commitment Hedged with Forward Contract On 9/30/2001, GlobalTechCo, a U.S. company issues a purchase order to a foreign supplier for.

Derivatives Marco Venuti 1. Financial derivatives These are characterised by an underlying element, which may be the price or rate of an asset or of a.

VALUATION OF INVENTORIES:

ACCOUNTING FOR DERIVATIVE INSTRUMENTS

4-1 CASE 5 Cash Flow Hedge of Variable-Rate Debt On 1/1/X1, XYZ, a ‘B’ rated entity, issued a $100 million note at LIBOR, semiannual payments and semiannual.

5-1 CASE 7 - Cash Flow Hedge of Forecasted Treasury Note Purchase On 1/1/X1, XYZ forecasts a 12/31/X1 purchase of $100 million 5-year 6% Treasury notes.

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Investments 12.

Understanding derivatives

McGraw-Hill/Irwin© 2008 The McGraw-Hill Companies, Inc. All rights reserved. 11 Multinational Accounting: Foreign Currency Transactions and Financial Instruments.

Foreign Currency Firm Commitment - Example On December 1, 2008, Mawr receives an order from a German customer. The delivery date is March 1, 2009, when.

Derivatives and Foreign Currency: Concepts and Common Transactions

Accounting for Derivatives and Hedging Activities

Advanced Financial Accounting: Chapter 9

3-1 Forwards and Futures Go To Bob Jensen’s Flow Chart

Translation Of Foreign Currency Transactions

Session VII & VIII Foreign Currency. INTERNATIONAL ACCOUNTING & FINANCIAL REPORTING Foreign Exchange Basics n Exchange rates n Conversion values.

©2003 Prentice Hall Business Publishing, Advanced Accounting 8/e, Beams/Anthony/Clement/Lowensohn Foreign Currency Concepts and Transactions Chapter.

1-0 FAS 133 IAS 30 CICA 13 Bob Jensen’s Free Tutorials, Glossaries, and Cases are at caseans/000index.htm

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Derivatives Appendix A.

CA. NIRMAL GHORAWAT B. Com (Hons), ACA 1. INTRODUCTION – HEDGE ACCOUNTING 2 Accounting Mismatch Recognition Measurement Timing Differences Hedged Item.

Chapter 11 Multinational Accounting: Foreign Currency Transactions and Financial Instruments Note: Students sometimes like to print slides as “handouts”

Prepared by: Patricia Zima, CA Mohawk College of Applied Arts and Technology Chapter 16A Hedging.

1 Derivative Accounting for Faculty What are we assuming students know before studying derivative accounting in 383? What is the scope of coverage in Accounting.

Foreign Currency Transactions

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Chapter Nine Foreign Currency Transactions and Hedging Foreign Exchange Risk Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

Net Revenue – Cost of Goods Sold = Gross Margin Gross Margin – Operating Expenses = Earning Before Interest and Taxes (Ebit) Earning Before Interest and.

ACCOUNTING FOR DERIVATIVE INSTRUMENTS

Intermediate Accounting James D. Stice Earl K. Stice

ACC 424 Financial Reporting II Lecture 13 Accounting for Derivative financial instruments.

Module Derivatives and Related Accounting Issues.

19-1 Intermediate Accounting,17E Stice | Stice | Skousen © 2010 Cengage Learning PowerPoint presented by: Douglas Cloud Professor Emeritus of Accounting,

1 Financial Accounting Standards Board Hedging Project IASB Education Session June 18, 2008 Kevin Stoklosa IASB MEETING JUNE 2008 OBSERVER NOTE 5.

McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 6 Foreign Currency Transactions and Hedging Foreign.

1 Derivatives, Contingencies, Business Segments, and Interim Reports.

Financial Instruments as Liabilities Revsine/Collins/Johnson/Mittelstaedt: Chapter 11 McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies,

SECTION IV DERIVATIVES. FUTURES AND OPTIONS CONTRACTS RISK MANAGEMENT TOOLS THEY ARE THE AGREEMENTS ON BUYING AND SELLING OF THESE INSTRUMENTS AT THE.

ACC 424 Financial Reporting II Lecture 13 Accounting for Derivative financial instruments.

CHAPTER Foreign Currency Transactions Fundamentals of Advanced Accounting 1 st Edition Fischer, Taylor, and Cheng 6 6.

Slide 8-0 Disclosure And Documentation Issues "New SEC Guidance for Management's Discussion.

Chapter 18 Intermediate Accounting II Otto Chang Professor of Accounting.

Chapter 13 Investments in Securities. 2 Financial Accounting, 7e Stice/Stice, 2006 © Thomson Financial Statement Items Covered Balance SheetIncome Statement.

Using Financial Information and Accounting Chapter 14.

17-1 ACTG 6580 Chapter 17 - Investments ACCOUNTING FOR FINANCIAL ASSETS Financial Asset   Cash.   Equity investment of another company (e.g.,

Explanatory Notes to 20F Disclosure on US Mortgage Business 2 April 2003.

12 7/e PowerPoint Author: Catherine Lumbattis COPYRIGHT © 2011 South-Western/Cengage Learning The Statement of Cash Flows.

Chapter 16 Appendix 16A Chapter 16 Appendix 16AHedging Prepared by: Dragan Stojanovic, CA Rotman School of Management, University of Toronto.

1 Advanced Accounting Autumn 2015 Chapter 12 Part I Bill Myer – Autumn 2015.

Accounting for Derivatives Pertemuan Matakuliah: Akuntansi Keuangan Lanjutan I Tahun: 2010.

5 Accounting for Foreign Currency Transactions and Hedging Foreign Exchange Risk.

Chapter Seven Foreign Currency Transactions and Hedging Foreign Exchange Risk McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All.

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Module 7: Intercorporate Investments

1. The Gardner Pharmacy uses the periodic inventory method

Gabriela H. Schneider, CMA Northern Alberta Institute of Technology

Derivative Financial Instruments

FINANCIAL DERIVATIVES (FD)

PART II: Corporate Accounting Concepts and Issues

Statement of Cash Flow Analysis MBA Kathmandu University School of Management (KUSOM)

בנק ישראל קורס “ניהול סיכונים” מפגש ראשון מבוא לניהול סיכונים

The Income Statement A summary of a firm’s revenues and expenses during a specified accounting period Profit (cash surplus) Loss (cash deficit) Revenues.

Derivative Financial Instruments

Advanced Accounting, Third Edition

Presentation transcript:

1-0 Accounting for Derivative Instruments and Hedging Activities FASB Statement 133 October 12-13, 2000 Chicago, IL

1-1 ACCOUNTING FOR DERIVATIVES FASB Statement No. 133 Presentation by Bavan Holloway Robert Jensen Ira G. Kawaller

1-2 CASE 1 Cash Flow Hedge of Forecasted Inventory Sale n ABC is hedging the risk of changes in cash flows related to a forecasted sale of 100,000 bushels of Commodity A to be sold at the end of period 1. The inventory carrying value is $1 million, and current market value is $1.1 million n On the first day of period 1, ABC enters into Derivative Z to sell 100,000 bushels at $1.1 million at the end of period n At hedge inception, the derivative is at-the-money (fair value is 0) n All terms of the commodity and the derivative match (i.e., no expected ineffectiveness) n On last day of Period 1, fair value of Derivative Z increased by $25,000 and expected sales price of 100,000 bushels of Commodity A decreased $25,000 n From Example 4, Appendix B of Standard

1-3 CASE 1 Cash Flow Hedge of Forecasted Inventory Sale Journal entries at end of period 1 Derivative Z25,000 OCI 25,000 To record Derivative Z at fair value Cash 25,000 Derivative Z 25,000 To record settlement of Derivative Z

1-4 CASE 1 Cash Flow Hedge of Forecasted Inventory Sale Journal entries at end of period 1 Cash1,075,000 CGS1,000,000 Revenue1,075,000 Inventory1,000,000 To record inventory sale OCI 25,000 Earnings 25,000 To reclassify amount in OCI to earnings upon inventory sale

1-5 CASE 1 Cash Flow Hedge of Forecasted Inventory Sale Forecasted cash flows:$1,100,000 Actual cash flows: Derivative$ 25,000 Sale of inventory 1,075,000 Total$1,100,000 The variability of cash flows related to the forecasted inventory sale is offset by change in value of derivative.

1-6 CASE 2 Fair Value Hedge of Inventory n ABC has 1,000 bushels of a Commodity with a fair value of $1.1 million and a carrying value of $1.0 million n ABC wants to hedge overall fair value of the Commodity n On 1/1/X1, ABC enters into an at-the-money matching derivative to hedge the changes in fair value of the 1,000 bushels of the Commodity

1-7 CASE 2 (Contd) Fair Value Hedge of Inventory n Effectiveness will be assessed by comparing entire change in fair value of derivative to change in market price of inventory (time value will be ignored for illustration purposes only) n On 1/31/X1, the fair value of the derivative has increased by $25,000 and the fair value of the inventory has decreased by $25,000

1-8 CASE 2 Fair Value Hedge of Inventory Journal entries at end of period: Derivative 25,000 Earnings25,000 To record derivative at fair value Earnings 25,000 Inventory25,000 To record loss on hedged inventory