Table of Contents

Course Learning Objectives. 4

Chapter 1 - Accounting for Derivatives  Section 1. 1

Learning Objectives: 1

Background. 1

Derivative Financial Instruments and Hedging. 2

Embedded Derivatives. 6

Hedge Accounting. 9

ASC 815, Derivatives and Hedging. 10

Qualifying Hedge Criteria - Effectiveness. 13

Fair Value Hedges. 14

Discontinuing a Fair Value Hedge. 16

Cash Flow Hedges. 17

Discontinuing a Cash Flow Hedge. 20

Foreign Currency Hedges. 21

Simplified Hedge Accounting Approach: Private Company Accounting Alternative for Certain Interest Rate Swaps 22

Chapter 1  Section 1 Review Questions. 24

Chapter 1 - Accounting for Derivatives  Section 2. 26

Concentrations of Credit Risk for All Financial Instruments. 26

Disclosure Requirements. 27

Offsetting of Assets and Obligations. 32

Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. 33

Mortgage Servicing Rights. 34

Collateral Pledged in Repurchase Agreements and Securities Lending Arrangements. 35

Options on Issuer's Securities. 36

Authoritative Literature. 37

Accounting for Certain Hybrid Financial Instruments. 37

Accounting for Servicing of Financial Assets. 38

ASC, FASB, and Difference between GAAP and IFRS. 39

Summary of Derivatives Accounting. 39

Chapter 1  Section 2 Review Questions. 40

Review Question Answers. 42

Appendix - Annual Report References. 50

Glossary. 54

Index. 58

Final Examination. 60