Verified Document

International Accounting Case Study

Hedging may be used to reduce risk. The three predominant types of hedging activities are fair value hedges, cash flow hedges, and foreign currency hedges. In this assignment, you will examine how hedging activities are reported. Download (attached file) and complete the computational problem, which illustrates hedge computations. Show or explain the calculations.

The current price of his bushel slightly decreased in July at $9.98 and then increased in December at $10.09.

In July, he sold 100,000 bushels at $9.99 with spot price being $10.00. He lost nothing.

In December the spot price was $9.98; the price decreased. He sold at $9.95 per bushel and actually made a profit of $4,000.

In December, however, the spot price for soybeans ($10.09) was higher than his future offset price making it non-profitable for him, $10,000

He won $4,000, he lost $1,000. His liability was $6,000

Compare and contrast the requirements for investments in derivative instruments and hedging activities under both U.S. GAAP SFAS No. 133 (R) and IFRS No. 39.

IFRS 39 permits investments in derivative instruments and hedging activities under certain circumstances as long as the hedging relationship is:

Thoroughly delineated and...

Parts of this document are hidden

View Full Document
svg-one

GAAP on the other hand requires that an entity recognize all derivatives unconditionally as either assets or liabilities in the financial statement and measure those instruments at fair value. Certain conditions make the derivative fall into a hedge of a particular category. All accounting and tasks of the derivative (and upon whether it can be used as a hedge) depend upon its objectives, descriptions, variables, and so forth (FASB Summary of Statement No. 133.)
Identify the accounting rules for periodic computation of unrealized gains and losses on investments in derivative instruments classified as hedge investments and their financial statement disposition.

IAS 39 requires recognition of a financial asset or a financial liability only when the entity becomes part of the contractual provisions of the instrument. There are also various conditions outlined…

Sources used in this document:
Sources

Deloitte IAS 39 -- Financial Instruments: Recognition and Measurement http://www.iasplus.com/en/standards/standard38

FASB Summary of Statement No. 133. Accounting for Derivative Instruments and Hedging Activities (Issued 6/98)

http://www.fasb.org/summary/stsum133.shtml

NY Times, (2012) Derivatives http://topics.nytimes.com/top/reference/timestopics/subjects/d/derivatives/index.html
Nardozzi, J. Hedge Accounting Can Bite You! http://www.nardozziconsulting.com/pdf/Hedge_Accounting_Can_Bite_You.pdf
Cite this Document:
Copy Bibliography Citation

Related Documents

Mathematics of Digital Photography
Words: 925 Length: 3 Document Type: Research Paper

Mathematics in Digital Photography The advances in both digital photography and computing have allowed more detailed and complex images to be shown on more realistic media than was ever previously possible. Through the use of more specialized equipment and digital imaging techniques the resulting photos of even the most novice user today can rival those of professionals from years before. This level of photographic precision could never have been achieved were

Mathematics As Creative Art P.K.
Words: 340 Length: 1 Document Type: Term Paper

if, as Halmos suggests, math is a creative art then math must also be the handmaid of science. Describing mathematics as a creative art helps students of math better understand the true roles of the mathematician. Numbers, while in many ways central to the art of math, do not comprise the whole lexicon of mathology. Mathematics does stem from "sheer pure intellectual curiosity," enabling students to perceive the world through

Mathematics Education the Objective of
Words: 677 Length: 2 Document Type: Term Paper

Balacheff (1987) described four levels of justification, which are those as follows: (1) Native empiricism; 2) Crucial experiment; 3) Generic example; and 4) Thought experiment. (Taflin, nd) Naive empiricism is stated to be "an assertion based on a small number of cases." (Taflin, nd) Crucial experiment is stated to be "an assertion based on a particular case, but the case was used as an example of a class of objects." (Taflin, nd) the

Mathematics From Conch Shells to
Words: 659 Length: 2 Document Type: Term Paper

Islamic art not only demonstrates the symbolic significance of geometric forms and their psychological, social, religious, and aesthetic functions. In addition to these purposes, Islamic art also demonstrates symmetry. Symmetry's appeal is well-known: babies tend to favor faces with symmetrical features over those with lop-sided noses or askew eyes. Although absolute symmetry is by no means a prerequisite for beauty, symmetry is usually perceived with pleasure. The Spirograph forms, explicated

Mathematics Assessment
Words: 1864 Length: 5 Document Type: Essay

Mathematics is closely connected to economics, commerce and business modelling, as well as systems for military weapons. Due to the widespread of its use, it was noted that students in the U.S. were beginning to perform a little worse in mathematics than children from other countries worldwide. Mathematical knowledge among citizens was considered a very important factor for a country to be a leading world power. Assessment activities have been

Mathematics Concepts in Profession Mathematics Concepts in
Words: 767 Length: 2 Document Type: Essay

Mathematics Concepts in Profession Mathematics Concepts in the Teaching Profession Mathematical concepts in professions My Profession and Applicable Math Concepts Mathematics is a branch of knowledge dealing with scientific notions of logical qualitative and quantitative arrangements. It extensively covers different aspects as well as having several subdivisions. It is a tool specially designed to handle and implement relative concepts, regardless of the kind of situational problem presented. Alongside the concepts, mathematics uses invented formulas

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now