Hedge accounting is a complex financial topic. Many companies use derivatives to hedge their foreign currency exposure. The most obvious foreign currency exposures to hedge are balance sheet items, such as foreign denominated receivables and payables, cash or other short-term assets or liabilities. These items are often hedged with forward or date-window forward contracts. In this program, we will:
- Review the requirements for Hedge Accounting
- Discuss how to identify the basic characteristics, risk management strategies, and accounting requirements for derivatives
- Summarize ASU 2017-12: Targeted Improvements to Accounting for Hedging Activities
- Discuss accounting for foreign currency hedges
To update financial professionals on the accounting for hedges of recognized foreign denominated assets and liabilities.
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Types of Hedges
– Fair value
– Cash flow
– Net investment - Interest Rate Swap
- Designating Qualifying Relationships
- Assessing Effectiveness
- Regression Analysis
- Applying ASC 815
- Cash Flow Hedge Accounting
- Required Documentation
- Current Events in Hedge Accounting
• Recognize the characteristics of hedge accounting
• Identify the authoritative account guidance for derivatives
• Recognize the phases in the life cycle of hedging relationships
• Identify the characteristics of a cash flow hedge
• Identify the characteristics of an interest rate swap used to hedge a note payable
• Recognize the criteria for use of the short-cut method for interest rate swaps by a public business entity
• Recognize circumstances when OCI must be reclassed to adjust interest expense when a swap is in place
• Identify circumstances in which a company would discontinue a hedging relationship