Accounting for Derivatives and Hedging

Course Description:

A derivative is a financial instrument or other contract that derives its value from the movement of prices, interest rates, or exchange rates associated with an underlying item. Uncertainty about the future fair value of assets and liabilities or about future cash flows exposes firms to risk. One way to manage the risk associated with fair value and cash flow fluctuations is through the use of derivatives. This course addresses the accounting and disclosure requirements related to derivative financial instruments (derivatives). 

Learning Objectives:

Upon successful completion of this course, participants will be able to:

• Define conventional and derivative financial instruments
• Explain disclosure of financial instruments with off-balance-sheet credit risk
• Distinguish among fair value hedges, cash flow hedges, and foreign currency hedges
• Determine hedge effectiveness criteria
• Outline offsetting of assets and obligations
• Explain selected disclosure requirements for other financial instruments, primarily related to fair value and concentrations of credit risk