A guide to derivatives and hedge accounting
Derivative instruments and hedge accounting and the related accounting guidance and financial reporting considerations are complex. Our publication, A guide to derivatives and hedge accounting, is intended to provide an overview of the accounting and financial statement presentation and disclosure requirements of derivative instruments and hedge accounting. Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) 815, Derivatives and Hedging, provides the authoritative guidance for the areas covered by this guide.
The guide includes:
- Chapter 1: Overview
- Chapter 2: Introduction to derivative instruments and the related accounting
- Chapter 3: Scope of ASC 815 and determining what constitutes a derivative instrument
- Chapter 4: Embedded derivatives
- Chapter 5: Overview of hedge accounting and the requirements to apply it
- Chapter 6: Commodities hedging
- Chapter 7: Hedges related to interest rate risk
- Chapter 8: Foreign currency hedges
- Chapter 9: Fair value hedge accounting
- Chapter 10: Cash flow hedge accounting
- Chapter 11: Presentation and disclosure
The June 2026 edition of this guide has been updated to incorporate guidance issued by the FASB:
- ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract
- ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements
The latest edition has also been updated to reflect the current status of the FASB’s standard setting activity in relation to its technical agenda and research projects impacting the guidance on derivative instruments and hedge accounting, as well as to remove discussion of the last-of-layer method due to the guidance being superseded by the portfolio layer method (ASU 2022-01) which is currently effective.