"What's Normal In Derivatives Accounting?"

Kawaller, Ira G.
July 2002
Financial Executive;Jul/Aug2002, Vol. 18 Issue 5, p41
Academic Journal
The article discusses the Financial Accounting Standards Board (FASB) statement No. 133, which refers to derivative securities and hedging transactions, the amendment FASB No. 138, and the application of accounting rules for normal purchase-and-sales exemptions. Two examples are given which focus on the "normal" exemption definition, initial net investment, and market risk. Eight steps for minimizing contractual risk exposures and three conditions for defining derivatives are mentioned. The FASB draft exposure for revising conditions related to defining derivatives in terms of option- and nonoption-based contracts is also mentioned. Forward contracts that can be defined as derivatives should be recognized in accounting as assets or liabilities. INSET: A Best Practices Primer..


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