Accounting For Risk Hedging And Complex Contracts

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Accounting For Risk Hedging And Complex Contracts

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Author : A. Rashad Abdel-Khalik
language : en
Publisher: Routledge
Release Date : 2013-10-08

Accounting For Risk Hedging And Complex Contracts written by A. Rashad Abdel-Khalik and has been published by Routledge this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-10-08 with Business & Economics categories.

With the exponential growth in financial derivatives, accounting standards setters have had to keep pace and devise new ways of accounting for transactions involving these instruments, especially hedging activities. Accounting for Risk, Hedging and Complex Contracts addresses the essential elements of these developments, exploring accounting as related to today's most relevant topics - risk, hedging, insurance, reinsurance, and more. The book begins by providing a basic foundation by discussing the concepts of risk, risk types and measurement, and risk management. It then introduces readers to the nature and valuation of free standing options, swaps, forward and futures as well as of embedded derivatives. Discussion and illustrations of the cash flow hedge and fair value hedge accounting treatments are offered in both single currency and multiple currency environments, including hedging net investment in foreign operations. The final chapter is devoted to the disclosure of financial instruments and hedging activities. The combination of these topics makes the book a must-have resource and reference in the field. With discussions of the basic tools and instruments, examinations of the related accounting, and case studies to help students apply their knowledge, this book is an essential, self-contained source for upper-level undergraduate and masters accounting students looking develop an understanding of accounting for today’s financial realities.

Hedging Instruments And Risk Management

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Author : Patrick Cusatis
language : en
Publisher: McGraw Hill Professional
Release Date : 2005-02-22

Hedging Instruments And Risk Management written by Patrick Cusatis and has been published by McGraw Hill Professional this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005-02-22 with Business & Economics categories.

Books on complex hedging instruments are often more confusing than the instruments themselves. Hedging Instruments & Risk Management brings clarity to the topic, giving money managers the straightforward knowledge they need to employ hedging tools and techniques in four key markets—equity, currency, fixed income, and mortgage. Using real-world data and examples, this high-level book shows practitioners how to develop a common set of mathematical and statistical tools for hedging in various markets and then outlines several hedging strategies with the historical performance of each.

Accounting For Derivatives Us Gaap

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Author : Jörg Decker
language : en
Publisher: GRIN Verlag
Release Date : 2003-07-23

Accounting For Derivatives Us Gaap written by Jörg Decker and has been published by GRIN Verlag this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003-07-23 with Business & Economics categories.

Seminar paper from the year 2003 in the subject Business economics - Accounting and Taxes, grade: 1,7 (A-), Technical University of Braunschweig (Economics - Controlling), course: Intenational Accounting, language: English, abstract: Some years before the financial scandal of Enron, which was mainly caused by the misuse of derivatives, the Financial Accounting Standard Board (FASB) began deliberating on issues related to derivatives and hedging transactions.1 The cause of thinking about changes in accounting for derivatives was a problematic situation in 1986 (comparable to current situation in Germany). For example, the applicatory use was very complicated and transactions with derivatives were not transparent enough. There were only clear standards for a few product groups and transactions with derivatives were not reported on the balance sheet.2 In consequence, first in 1986, a work program called Project on Financial Instruments was founded.3 In 1992 the members of the FASB received the responsibility in working on derivatives and continued improving the existing statement for about six years in more than 100 meetings. In June 1998 (06/16/1998) the Statement for Financial Accounting Standard (SFAS) No. 133 “Accounting for Derivative Instruments and Hedging Instruments” passed as an outcome of these efforts and is valid for every entity.4 Some public voices say, it is one of the most complex and controversial standards ever issued by the FASB.5 Statement No. 133 replaced FASB Statement No. 80 (Accounting for Future Contracts), No. 105 (Disclosure of Information about Financial Instruments with Off-Balance-Sheet Risk and Financial Instruments with Concentrations of Credit Risk) and No. 119 (Disclosures about Derivative Financial Instruments and Fair Value of Financial Instruments). 6 Also FASB Statement No. 52 (Foreign Currency Translation) and No. 107 (Disclosures about Fair Value of Financial Instruments) were amended, by including the “disclosure provisions about concentration of credit risk” form Statement No. 105 in Statement No.107. Despite the fact that the new Statement was issued in June 1998 it only was effective on financial statements for fiscal years beginning after June 15, 2000. [...] 1 Cp. Ernst & Young LLP (2002), p. 1. 2 Cp. Henne, T.(2000), p. 51. 3 Cp. Zander, D. (2000), p. 985. 4 Cp. Maulshagen ,A./Maulshagen, O. (1998), p. 2151. 5 Cp. International Treasurer (1999). 6 Cp. Ernst & Young LLP (2002), p. 1.

Accounting For Derivatives

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Author : Juan Ramirez
language : en
Publisher: John Wiley & Sons
Release Date : 2011-03-10

Accounting For Derivatives written by Juan Ramirez and has been published by John Wiley & Sons this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011-03-10 with Business & Economics categories.

Accounting for Derivatives: Advanced Hedging under IFRS is a comprehensive practical guide to hedge accounting. This book is neither written by auditors afraid of providing opinions on strategies for which accounting rules are not clear, nor by accounting professors lacking practical experience. Instead, it is based on day-to-day experience, advising corporate CFOs and treasurers on sophisticated hedging strategies. It covers the most frequent hedging strategies and addresses the most pressing challenges that corporate executives find today. The book is case-driven with each case analysing in detail a real-life hedging strategy. A broad range of hedging strategies have been included, some of them using sophisticated derivatives. The objective of this book is to provide a conceptual framework based on the extensive use of cases so that readers can create their own accounting interpretation of the hedging strategy being considered. Accounting for Derivatives will be essential reading for CFOs, internal auditors and treasurers of corporations, professional accountants as well as derivatives professionals working at commercial and investment banks. Key feature include: The only book to cover IAS39 from the derivatives practitioner’s perspective Extensive real-life case studies to providing essential information for the practitioner Covers hedging instruments such as forwards, swaps, cross-currency swaps, and combinations of standard options as well as more complex derivatives such as knock-in forwards, KIKO forwards, range accruals and swaps in arrears. Includes the latest information on FX hedging and hedging of commodities

Accounting For Derivatives

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Author : Juan Ramirez
language : en
Publisher: John Wiley & Sons
Release Date : 2015-01-23

Accounting For Derivatives written by Juan Ramirez and has been published by John Wiley & Sons this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015-01-23 with Business & Economics categories.

The derivative practitioner’s expert guide to IFRS 9 application Accounting for Derivatives explains the likely accounting implications of a proposed transaction on derivatives strategy, in alignment with the IFRS 9 standards. Written by a Big Four advisor, this book shares the author’s insights from working with companies to minimise the earnings volatility impact of hedging with derivatives. This second edition includes new chapters on hedging inflation risk and stock options, with new cases on special hedging situations including hedging components of commodity risk. This new edition also covers the accounting treatment of special derivatives situations, such as raising financing through commodity-linked loans, derivatives on own shares and convertible bonds. Cases are used extensively throughout the book, simulating a specific hedging strategy from its inception to maturity following a common pattern. Coverage includes instruments such as forwards, swaps, cross-currency swaps, and combinations of standard options, plus more complex derivatives like knock-in forwards, KIKO forwards, range accruals, and swaps in arrears. Under IFRS, derivatives that do not qualify for hedge accounting may significantly increase earnings volatility. Compliant application of hedge accounting requires expertise across both the standards and markets, with an appropriate balance between derivatives expertise and accounting knowledge. This book helps bridge the divide, providing comprehensive IFRS coverage from a practical perspective. Become familiar with the most common hedging instruments from an IFRS 9 perspective Examine FX risk and hedging of dividends, earnings, and net assets of foreign subsidies Learn new standards surrounding the hedge of commodities, equity, inflation, and foreign and domestic liabilities Challenge the qualification for hedge accounting as the ultimate objective IFRS 9 is set to replace IAS 39, and many practitioners will need to adjust their accounting policies and hedging strategies to conform to the new standard. Accounting for Derivatives is the only book to cover IFRS 9 specifically for the derivatives practitioner, with expert guidance and practical advice.

Ias 39 Accounting For Financial Instruments

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Author : Kathinka Kurz
language : en
Publisher: diplom.de
Release Date : 2004-10-12

Ias 39 Accounting For Financial Instruments written by Kathinka Kurz and has been published by diplom.de this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004-10-12 with Business & Economics categories.

Inhaltsangabe:Abstract: Financial markets have developed extremely in volume and complexity in the last 20 years. International investments are booming, due to the general relaxation of capital controls and the increasing demand of international diversification by investors. Driven by these developments the use and variety of financial instruments has grown enormously. Risk management strategies that are crucial to business success can no longer be executed without the use of derivative instruments. Accounting standards have not kept pace with the dynamic development of financial markets and instruments. Concerns about proper accounting regulations for financial instruments, especially derivatives, have been sharpened by the publicity surrounding large derivative-instrument losses at several companies. Incidences like the breakdown of the Barings Bank and huge losses by the German Metallgesellschaft have captured the public s attention. One of the standard setters greatest challenges is to develop principles applicable to the full range of financial instruments and implement structures that will adapt to new products that will continue to develop. Considering these aspects, the focus of this paper is to illustrate how financial instruments are accounted for under the regulations of the International Accounting Standard (IAS) 39. It refers to the latest version, Revised IAS 39 , which was issued in December 2003 and has to be applied for the annual reporting period beginning on or after January 1. 2005. First, the general regulations of this standard are demonstrated followed by special hedge accounting regulations. An overall conclusion that points out critical issues of IAS 39 is provided at the end of the paper. IAS 39 is highly complex and one of the most criticized International Financial Reporting Standards (IFRS). In many cases, the adoption of IAS 39 will lead to significant changes compared to former accounting regulations applied. Therefore the paper is designed to provide a broad understanding of the standard and to facilitate its implementation. Inhaltsverzeichnis:Table of Contents: Executive Summary1 1.Scope2 2.Financial Instruments - General Definitions and Regulations4 2.1Overview4 2.2Financial Assets4 2.3Financial Liabilities5 2.4Five Categories of Financial Instruments5 2.4.1Financial Assets and Liabilities at Fair Value through Profit or Loss6 2.4.2Held-to-Maturity Investment Assets7 2.4.3Loans and [...]

Risk Management Derivatives And Financial Analydsis Under Sfas

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Author : Gary Gastineau
language : en
Publisher: Wiley-Blackwell
Release Date : 2001-04-18

Risk Management Derivatives And Financial Analydsis Under Sfas written by Gary Gastineau and has been published by Wiley-Blackwell this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001-04-18 with Business & Economics categories.

Senior Vice President, New Products Development at the American Stock Exchange Risk management is concerned with the tradeoffs between financial risk and reward that inevitably face a firm's managers, its board of directors, and ultimately its shareholders. Although risk management itself is not new, what is new are the complicated financial instruments being used to manage risk-instruments that are frequently classified under the seemingly simple category of "derivatives." Use of these instruments have largely gone unreported in financial statements, much to the dismay of financial analysts and in contrast to their ideal of transparency. This volume explains firm's use of risk management practices and how those practices can be accounted. Coverage includes a practical and theoretical basis for risk management information on how a firm's use of derivatives affects financial analysts recent reforms in accounting for derivatives.

Hedge Accounting And Its Application In Energy Finance

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Author : Mathias Lang
language : en
Publisher:
Release Date : 2011

Hedge Accounting And Its Application In Energy Finance written by Mathias Lang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.

IAS 39, and in particular, its paragraphs about hedge accounting are among the most complex and challenging accounting standards that have ever been issued. In addition the guidance established by IAS 39 for the practical application of hedge accounting in energy finance is limited. The purpose of this paper is to analyze the different hedging strategies of power companies with the intent of increasing the transparency of the accounting treatment of these entities. There are two different types of hedges in the power industry that are relevant with respect to the hedging of commodity flows: cash flow and fair value hedges. However, the analysis of the existing hedge accounting framework of IAS 39 reveals three major shortcomings and limitations of the current concept. First, members of the power industry and accounting experts question the application of explicit and fixed ranges to assess the hedge effectiveness. Second, it is not feasible to hedge separated risk components of commodity contracts. Finally, the current hedge accounting framework does not address important risk management strategies in the power industry such as portfolio or macro hedging. Against this backdrop, IASB is revising the existing hedge accounting framework under the replacement project of IAS 39 with a focus on both, general and macro hedge accounting.

The Fair Value Of Insurance Business

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Author : Irwin T. Vanderhoof
language : en
Publisher: Springer Science & Business Media
Release Date : 2012-12-06

The Fair Value Of Insurance Business written by Irwin T. Vanderhoof and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-12-06 with Business & Economics categories.

Insurance companies, as well as banks and thrift institutions, have traditionally reported assets and liabilities on the basis of their amortized cost, or book value. But following the turmoil in securities markets due to highly volatile interest rate fluctuations in the 1980s and the early 1990s, and problems caused by inadequate liquidity, in the mid-1990s the Financial Accounting Standards Board (FASB) issued a new ruling calling for financial intermediaries to report the fair, or market, value of most assets. Called FAS 115, this new standard is the first step in the eventual change to valuing all the assets and liabilities belonging to financial intermediaries under the fair value accounting method. Thus, these changes will pose tremendous future implications for three key business measures of a financial intermediary: Solvency: if the fair values of assets and liabilities are out-of-step, then healthy companies may report negative net worth and insolvent companies may appear to be in sound financial condition. Reported Earnings: if the fair values of assets and liabilities are out of step, then reported earnings will not accurately represent the financial operations of the company. Risk Management: FASB recently postponed the implementation of its new rules on accounting for the use of derivatives instruments. However, if the final set of rules for figuring the fair value of derivatives is not carefully crafted, it may be possible that companies prudently hedging their risks are subject to penalties in their financial reports, while companies taking greater risks appear to have less volatile financial performance. Compared to banks and other financial intermediaries, life insurance companies have the longest term and most complex liabilities, and hence the new FASB requirement poses the most severe challenges to the life insurance industry. The lessons learned from the debate among life insurance academics and professionals about how respond to the fair value reporting rule will be instructive to their counterparts in other sectors of the insurance industry, as well as those involved with other financial institutions. Of particular note are the two papers which comprise Part III. The first provides examples of the fair valuing of annuity contracts, while the second offers examples of the fair valuing of term insurance products. As the papers collected in The Fair Value of Insurance Business extend and update some of the issues treated in a previous Salomon Center conference volume, The Fair Value of Insurance Liabilities, this new volume may be viewed as a companion to the earlier book.

Practical Guide To Financial Instruments

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Author : Santosh Maller
language : en
Publisher: Bloomsbury Publishing
Release Date : 2021-05-15

Practical Guide To Financial Instruments written by Santosh Maller and has been published by Bloomsbury Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-05-15 with Law categories.

About the book Accounting for financial instruments under Ind AS is generally complex. In India, we do not have much of a history of a comprehensive and robust accounting framework for financial instruments. Historically, accounting for financial instruments is primarily based on form rather than the contractual terms of instruments. Focus on accounting for financial instruments started only since 2007. Owing to global financial crisis which raised issues regarding accounting treatment of financial instruments, various accounting standards setting bodies examined the robustness of accounting for financial instruments. Further, Ind AS transition resulted in high-quality, principles-based, globally comparable financial reporting of large Indian companies. Accounting for financial instruments under Ind AS is quite robust and comprehensive. Towards this end, this book attempts to provide insights and in-depth analysis on interpretative issues and complex principles in the Ind ASs dealing with financial instruments. The requirements of Ind AS 32, Financial instruments: Presentation, Ind AS 109, Financial instruments, and Ind AS 107 Financial instruments: Disclosures are extensively dealt with. There are separate chapters addressing: Scope of the requirements. Debt/equity classification. Classification. Recognition and Derecognition. Subsequent measurement. Fair values and impairment. Hedge accounting. Presentation and Disclosures. Implications on key provisions of Companies Act, 2013. ICAI's Guidance Note on Accounting for Derivative Contracts. This book is intended to help the companies to identify Ind AS requirements that are relevant to them and evaluate various aspects of financial instruments accounting. The book would be an immensely useful referencer for professionals, practitioners and corporates. Key features - To simplify the reading experience, the chapters include a brief, easy to understand, summary of the relevant topic, followed by Frequently Asked Questions (FAQs) on the chapter. - Covers examples-based illustrations of complex topics. - Covers case studies on hedge accounting with journal entries, guidance for hedge documentation and effectiveness testing. - Includes real life extracts of disclosures of financial instruments. - Covers the amendment related to LIBOR and other interbank offered rates ('IBORs') issued by the Ministry of Corporate Affairs vide Companies (Indian Accounting Standards) Amendment Rules, 2020 on 24 July, 2020. - Covers key implications of Ind AS under Companies Act, 2013.About the book