Title Accounting for derivatives : advanced hedging under ifrs 9 / Juan Ramirez. [O'Reilly electronic resource]

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Second edition.

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West Sussex, United Kingdom ; New York : Wiley, 2015.

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Bookmark link: https://library.naperville-lib.org:444/record=b3169117~S1

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Summary	"The derivative practitioner's expert guide to IFRS 9 applicationAccounting 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"-- Provided by publisher
Bibliography	Includes bibliographical references and index.
Contents	Machine generated contents note: 1.1. Accounting Categories for Financial Assets -- 1.1.1. Financial Asset Categories -- 1.1.2. Financial Assets at Amortised Cost -- 1.1.3. Financial Assets at Fair Value through Other Comprehensive Income -- 1.1.4. Financial Assets at Fair Value through Profit or Loss -- 1.1.5. Financial Assets [2014] Initial and Subsequent Recognition -- 1.1.6. Reclassifications -- 1.2. The Amortised Cost Calculation: Effective Interest Rate -- 1.2.1. Example of Effective Interest Rate Calculation [2014] Fixed Rate Bond -- 1.2.2. Effective Interest Rate Calculation [2014] Floating Rate Debt -- 1.3. Examples of Accounting for Fixed Rate Bonds -- 1.3.1. Example of a Fixed Rate Bond at Amortised Cost -- 1.3.2. Example of a Fixed Rate Bond Recognised at FVOCI -- 1.4. Accounting Categories For Financial Liabilities -- 1.4.1. Financial Liability Categories -- 1.4.2. Partial Repurchases of Financial Liabilities -- 1.4.3. Changes in Credit Risk in Financial Liabilities at FVTPL -- 1.5. The Fair Value Option -- 1.6. Hybrid And Compound Contracts -- 1.6.1. Embedded Derivatives in Assets or Liabilities [2014] Hybrid Instruments -- 1.6.2. Liability Compound Instruments -- 2.1. Hedge Accounting [2014] Types of Hedges -- 2.1.1. Derivative Definition -- 2.1.2. Hedge Accounting -- 2.1.3. Accounting for Derivatives -- 2.1.4. Undesignated or Speculative -- 2.2. Types of Hedges -- 2.2.1. Fair Value Hedge -- 2.2.2. Cash Flow Hedge -- 2.2.3. Net Investment Hedge -- 2.3. Hedged Item Candidates -- 2.3.1. Hedged Item Candidates -- 2.3.2. Forecast Transaction versus Firm Commitment -- 2.4. Hedging Instrument Candidates -- 2.5. Hedging Relationship Documentation -- 2.6. Hedge Effectiveness Assessment -- 2.6.1. Qualifying Criteria for Hedge Accounting -- 2.6.2. Hedge Ratio -- 2.6.3. Effectiveness Assessment -- 2.6.4. Effectiveness Assessment Methods -- 2.6.5. The Critical Terms Method -- 2.6.6. The Simple Scenario Analysis Method -- 2.6.7. The Regression Analysis Method -- 2.6.8. The Monte Carlo Simulation Method -- 2.6.9. Suggestions Regarding the Assessment Methods -- 2.7. The Hypothetical Derivative Simplification -- 2.8. Rebalancing -- 2.8.1. Accounting for Rebalancings -- 2.9. Discontinuation of Hedge Accounting -- 2.10. Options And Hedge Accounting -- 2.10.1. Intrinsic Value versus Time Value -- 2.10.2. In-, At- or Out-of-the-Money -- 2.10.3. Accounting Treatment for the Time Value of Options -- 2.10.4. Example of Option Hedging a Transaction Related Item [2014] Actual Time Value Exceeding Aligned Time Value -- 2.10.5. Example of Option Hedging a Transaction Related Item [2014] Actual Time Value Lower Than Aligned Time Value -- 2.10.6. Example of Option Hedging a Time-Period Related Item [2014] Actual Time Value Exceeding Aligned Time Value -- 2.10.7. Example of Option Hedging a Time-Period Related Item [2014] Actual Time Value Lower Than Aligned Time Value -- 2.10.8. Written Options -- 2.11. Forwards and Hedge Accounting -- 3.1. Fair Valuation [2014] Overview of IFRS 13 -- 3.1.1. Definition of Fair Value -- 3.1.2. Fair Value Hierarchy -- 3.1.3. Level 1 Financial Instruments -- 3.1.4. Level 2 Financial Instruments -- 3.1.5. Level 3 Financial Instruments -- 3.1.6. Mid-to-Bid and Mid-to-Offer Adjustments -- 3.1.7. Credit and Debit Valuation Adjustment -- 3.1.8. Funding Valuation Adjustment -- 3.1.9. Model Uncertainty Adjustment -- 3.1.10. Day 1 Profit (or Loss) -- 3.2. Case Study [2014] Credit Valuation Adjustment of an Interest Rate Swap -- 3.2.1. Simple One-Period Model of Default -- 3.2.2. Working Example of CVA in a Swap -- 3.2.3. Debit Valuation Adjustments -- 3.2.4. Combining CVA and DVA -- 3.2.5. Calculating CVA and DVA Using Monte Carlo Simulation -- 3.3. Overnight Index Swap Discounting -- 4.1. FX Forwards -- 4.1.1. Product Description -- 4.1.2. Forward Points -- 4.2. Interest Rate Swaps -- 4.2.1. Product Description -- 4.2.2. IFRS 9 Accounting Implications -- 4.3. Cross-Currency Swaps -- 4.3.1. Product Description -- 4.3.2. IFRS 9 Accounting Implications -- 4.4. Standard (Vanilla) Options -- 4.4.1. Product Description -- 4.4.2. Standard Equity Options -- 4.4.3. Standard Foreign Exchange Options -- 4.4.4. Interest Rate Options [2014] Caps, Floors and Collars -- 4.5. Exotic Options -- 4.6. Barrier Options -- 4.6.1. Knock-out Bather Options [2014] Product Description -- 4.6.2. Knock-in Bather Options [2014] Product Description -- 4.7. Range Accruals -- 5.1. Types of Foreign Exchange Exposure -- 5.2. Introductory Definitions -- 5.2.1. Functional Currency and Presentation Currency -- 5.2.2. Relevant Dates in an FX Transaction -- 5.3. Summary of IAS 21 Translation Rates.
	5.3.1. Monetary versus Non-monetary Items -- 5.3.2. Translation Rates -- 5.4. Foreign Currency Transactions -- 5.4.1. Summary of Most Commonly Used FX Derivatives -- 5.5. Case Study: Hedging A Forecast Sale and Subsequent Receivable with an FX Forward (Forward Element Included in Hedging Relationship) -- 5.5.1. Background -- 5.5.2. Setting the Hedging Relationship Term -- 5.5.3. Hedging Relationship Documentation -- 5.5.4. Hedge Effectiveness Assessment [2014] Hypothetical Derivative -- 5.5.5. Hedge Effectiveness Assessment Performed at Hedge Inception -- 5.5.6. Fair Valuation of Hedged Item and Hypothetical Derivative at the Relevant Dates -- 5.5.7. Accounting Entries [2014] Hedge Objective Unchanged: No Discontinuation -- 5.5.8. Accounting Entries [2014] Hedge Risk Management Objective Changed: Discontinuation -- 5.6. Case Study: Hedging a Forecast Sale with an FX Forward -- 5.6.1. Setting the Hedging Relationship Term -- 5.6.2. Hedging Relationship Documentation -- 5.6.3. Hedge Effectiveness Assessment -- 5.6.4. Hedge Effectiveness Assessment Performed at Hedge Inception -- 5.6.5. Fair Valuation of Hedged Item and Hypothetical Derivative at the Relevant Dates -- 5.6.6. Accounting Entries When the Forward Element is Included in the Hedging Relationship -- 5.6.7. Accounting Election When the Forward Element is Excluded from the Hedging Relationship -- 5.6.8. Accounting When the Forward Element is Excluded from the Hedging Relationship and Recognised in Profit or Loss -- 5.6.9. Accounting When the Forward Element is Excluded from the Hedging Relationship and Aligned Portion Temporarily Recognised in OCI -- 5.6.10. Final Remarks: Inclusion versus Exclusion of the Forward Element -- 5.7. Case Study: Hedging a Forecast Sale and Subsequent Receivable with a Tunnel -- 5.7.1. Hedging Relationship Documentation -- 5.7.2. Hedge Effectiveness Assessment -- 5.7.3. Hedge Effectiveness Assessment Performed at Hedge Inception -- 5.7.4. Fair Valuation of Hedged Item and Hypothetical Derivative at the Relevant Dates -- 5.7.5. Calculation of Effective and Ineffective Amounts -- 5.7.6. Accounting Entries -- 5.7.7. Accounting Entries [2014] Discontinuation by Changing Risk Management Objective -- 5.7.8. Final Remarks -- 5.8. Case Study: Hedging A Forecast Sale and Subsequent Receivable with a Participating Forward -- 5.8.1. Participating Forward Hedge Accounting Issues -- 5.8.2. Alternative 1: Participating Forward Split into a Forward and an Option -- 5.8.3. Alternative 2(a): Participating Forward in its Entirety -- 5.8.4. Alternative 2(b): Participating Forward in its Entirety [2014] Readjusting the Hedge Ratio -- 5.9. Case Study: Hedging a Highly Expected Foreign Sale with a Knock-In Forward (Introduction) -- 5.9.1. Accounting Optimisation of the Knock-in Forward -- 5.10. Case Study: Hedging a Forecast Sale And Subsequent Receivable with a Knock-In Forward (Splitting Alternative) -- 5.10.1. Terms of the Split into a Forward and a Knock-out Option -- 5.10.2. Hedging Relationship Documentation -- 5.10.3. Hedge Effectiveness Assessment -- 5.10.4. Hedge Effectiveness Assessment Performed at Hedge Inception -- 5.10.5. Fair Valuations of Derivative Contracts and Hypothetical Derivative at the Relevant Dates -- 5.10.6. Calculation of Effective and Ineffective Amounts -- 5.10.7. Accounting Entries -- 5.11. Case Study: Hedging A Forecast Sale and Subsequent Receivable with a Knock-In Forward (Instrument In Its Entirety) -- 5.11.1. Hedging Relationship Documentation -- 5.11.2. Hedge Effectiveness Assessment -- 5.11.3. Hedge Effectiveness Assessment Performed at Hedge Inception -- 5.11.4. Fair Valuations of Hedging Instrument and Hypothetical Derivative at the Relevant Dates -- 5.11.5. Calculation of Effective and Ineffective Amounts -- 5.11.6. Accounting Entries -- 5.12. Case Study: Hedging A Forecast Sale and Subsequent Receivable with a Knock-In Forward (Rebalancing Approach) -- 5.12.1. Quantity of Hedged Item Estimation -- 5.12.2. Hedging Relationship Documentation -- 5.12.3. Hedge Effectiveness Assessment -- 5.12.4. Hedge Effectiveness Assessment Performed at Hedge Inception -- 5.12.5. Fair Valuations at the Relevant Dates -- 5.12.6. Effective and Ineffective Amounts at the Relevant Dates -- 5.12.7. Accounting Entries -- 5.13. Case Study: Hedging A Highly Expected Foreign Sale with a Kiko Forward -- 5.13.1. Hedge Accounting Optimisation -- 5.13.2. Hedge Accounting Application for Approach 1 [2014] Forward plus Residual Derivative -- 5.13.3. Hedging Relationship Documentation -- 5.13.4. Hedge Effectiveness Assessment Performed at Hedge Inception -- 5.13.5. Fair Valuations of Derivative Contracts and Hypothetical Derivative at the Relevant Dates.
	Note continued: 5.13.6. Accounting Entries -- 5.13.7. Additional Remarks -- 5.14. Case Study: Hedging A Forecast Sale and Subsequent Receivable with a Range Accrual (Part 1) -- 5.15. Case Study: Hedging A Forecast Sale and Subsequent Receivable with a Range Accrual (Designation In Its Entirety) -- 5.15.1. Hedging Relationship Documentation -- 5.15.2. Hedge Effectiveness Assessment -- 5.15.3. Hedge Effectiveness Assessment Performed at Hedge Inception -- 5.15.4. Fair Valuations and Calculations of Effective/Ineffective Amounts -- 5.15.5. Accounting Entries -- 5.16. Case Study: Hedging Forecast Sale and Subsequent Receivable with a Range Accrual (Splitting Approach) -- 5.16.1. Accounting Entries -- 5.16.2. Final Remarks -- 5.17. Hedging On A Group Basis [2014] The Treasury Centre Challenge -- 5.17.1. Accounting Implications at Subsidiary Level -- 5.17.2. Accounting Implications at Consolidated Level -- 5.18. Hedging Forecast Intragroup Transactions -- 5.18.1. Example of Hedge of Forecast Intragroup Transaction -- 6.1. Stand-Alone Versus Consolidated Financial Statements -- 6.1.1. Subsidiary Financial Statements -- 6.1.2. Parent-Only Financial Statements -- 6.1.3. Consolidated Financial Statements -- 6.2. The Translation Process -- 6.2.1. Basic Procedures prior to Translation -- 6.2.2. Specific Translation Procedures -- 6.2.3. Hyperinflationary Economies -- 6.3. The Translation Differences Account -- 6.4. Special Items That Are Part of a Net Investment -- 6.4.1. Goodwill and Fair Value Adjustments -- 6.4.2. Long-Term Investments in a Foreign Subsidiary -- 6.4.3. Disposal of a Foreign Operation -- 6.5. Effect Of Minority Interests on Translation Differences -- 6.6. Hedging Net Investments In Foreign Operations -- 6.6.1. Net Investment Hedge Issuing Foreign Currency Debt -- 6.6.2. Net Investment Hedge Using Derivatives -- 6.7. Case Study: Accounting for Net Investments In Foreign Operations -- 6.7.1. Elements of the Net Assets of a Foreign Subsidiary -- 6.7.2. Translation Process on Acquisition Date -- 6.7.3. Translation Process on First Reporting Date -- 6.8. Case Study: Net Investment Hedge with a Forward -- 6.8.1. Hedging Relationship Documentation -- 6.8.2. Hedge Effectiveness Assessment -- 6.8.3. Hedge Effectiveness Assessment Performed at Hedge Inception -- 6.8.4. Fair Values and Calculation of Effective and Ineffective Amounts -- 6.8.5. Accounting Entries [2014] Forward Points Included in Hedging Relationship -- 6.8.6. Accounting Entries [2014] Forward Points Excluded from Hedging Relationship -- 6.8.7. Implications of the FX Forward Points -- 6.9. Case Study: Net Investment Hedge Using Foreign Currency Debt -- 6.9.1. Hedging Relationship Documentation -- 6.9.2. Hedge Effectiveness Assessment -- 6.9.3. Hedge Effectiveness Assessment Performed at Hedge Inception -- 6.9.4. Other Relevant Information -- 6.9.5. Accounting Entries -- 6.9.6. Final Remarks -- 6.10. Net Investment Hedging With Cross-Currency Swaps -- 6.11. Case Study: Net Investment Hedge with a Floating-To-Floating Cross-Currency Swap -- 6.11.1. Hedging Relationship Documentation -- 6.11.2. Hedge Effectiveness Assessment -- 6.11.3. Hedge Effectiveness Assessment Performed at Hedge Inception -- 6.11.4. Other Relevant Information -- 6.11.5. Accounting Entries -- 6.11.6. Final Remarks -- 6.12. Case Study: Net Investment Hedge with a Fixed-To-Fixed Cross-Currency Swap -- 6.12.1. Hedging Relationship Documentation -- 6.12.2. Hedge Effectiveness Assessment -- 6.12.3. Hedge Effectiveness Assessment Performed at Hedge Inception -- 6.12.4. Other Relevant Information -- 6.12.5. Accounting Entries -- 6.13. Case Study: Hedging Intragroup Foreign Dividends -- 6.13.1. Effects of Intercompany Foreign Dividends on Individual and Consolidated Statements -- 6.13.2. Hedging Intercompany Foreign Dividends with an FX Forward -- 6.14. Case Study: Hedging Foreign Subsidiary Earnings -- 6.14.1. Hedging Relationship Documentation -- 6.14.2. Hedge Effectiveness Assessment -- 6.14.3. Hedge Effectiveness Assessment Performed at Hedge Inception -- 6.14.4. Other Relevant Information -- 6.14.5. Accounting Entries -- 6.14.6. Final Remarks -- 6.15. Case Study: Integral Hedging of an Investment in a Foreign Operation -- 7.1. Common Interest Rate Hedging Strategies -- 7.2. Separation Of Embedded Derivatives in Structured Debt Instruments -- 7.3. Interest Accruals -- 7.4. Most Common Interest Rate Derivative Instruments -- 7.5. Case Study: Hedging a Floating Rate Liability With -- an Interest Rate Swap -- 7.5.1. Hedging Relationship Documentation -- 7.5.2. Hedge Effectiveness Assessment -- 7.5.3. Hedge Effectiveness Assessment Performed at the Start of the Hedging Relationship -- 7.5.4. Fair Valuations, Effective/Ineffective Amounts and Cash Flow Calculations.
	7.5.5. Accounting Entries -- 7.5.5. Final Remarks -- 7.6. Case Study: Hedging A Floating Rate Liability With a Zero-Cost Collar -- 7.6.1. Hedging Relationship Documentation -- 7.6.2. Hedge Effectiveness Assessment -- 7.6.3. Hedge Effectiveness Assessment Performed at the Start of the Hedging Relationship -- 7.6.4. Fair Valuations, Effective/Ineffective Amounts and Cash Flow Calculations -- 7.6.5. Accounting Entries -- 7.6.6. Final Remarks -- 7.7. Implications of Interest Accruals and Credit Spreads -- 7.7.1. Background Information -- 7.7.2. Credit Spread and Hedge Accounting -- 7.7.3. Interest Accruals and Fair Valuations -- 7.8. Case Study: Hedging a Fixed Rate Liability With an Interest Rate Swap -- 7.8.1. Background Information -- 7.8.2. Hedging Relationship Documentation -- 7.8.3. Hedge Effectiveness Assessment -- 7.8.4. Hedge Effectiveness Assessment Performed at the Start of the Hedging Relationship -- 7.8.5. Fair Valuations, Effective/Ineffective Amounts and Cash Flow Calculations -- 7.8.6. Accounting Entries -- 7.8.7. Concluding Remarks -- 7.9. Case Study: Hedging A Future Fixed Rate Issuance with an Interest Rate Swap -- 7.9.1. Background Information -- 7.9.2. Hedging Relationship Documentation -- 7.9.3. Hedge Effectiveness Assessment -- 7.9.4. Hedge Effectiveness Assessment Performed at the Start of the Hedging Relationship -- 7.9.5. Fair Valuations, Effective/Ineffective Amounts and Cash Flow Calculations -- 7.9.6. Accounting Entries -- 7.9.7. Concluding Remarks -- 7.10. Case Study: Hedging A Future Floating Rate Issuance with an Interest Rate Swap -- 7.10.1. Background Information -- 7.10.2. Hedging Relationship Documentation -- 7.10.3. Hedge Effectiveness Assessment -- 7.10.4. Hedge Effectiveness Assessment Performed at the Start of the Hedging Relationship -- 7.10.5. Fair Valuations, Effective/Ineffective Amounts and Cash Flow Calculations -- 7.10.6. Accounting Entries -- 7.10.7. Concluding Remarks -- 7.11. Case Study: Hedging A Fixed Rate Liability with a Swap In Arrears -- 7.11.1. Background Information -- 7.11.2. Hedging Relationship Documentation -- 7.11.3. Hedge Effectiveness Assessment -- 7.11.4. Hedge Effectiveness Assessment Performed at the Start of the Hedging Relationship -- 7.11.5. Fair Valuations, Effective/Ineffective Amounts and Cash Flow Calculations -- 7.11.6. Accounting Entries -- 7.11.7. Concluding Remarks -- 7.12. Case Study: Hedging A Floating Rate Liability with a Kiko Collar -- 7.12.1. Background Information -- 7.12.2. Split between Hedge Accounting Compliant Derivative and Residual Derivative -- 7.12.3. Hedging Relationship Documentation -- 7.12.4. Hedge Effectiveness Assessment -- 7.12.5. Hedge Effectiveness Assessment Performed at the Start of the Hedging Relationship -- 7.12.6. Fair Valuations, Effective/Ineffective Amounts and Cash Flow Calculations -- 7.12.7. Accounting Entries -- 7.12.8. Concluding Remarks -- 8.1. Case Study: Hedging a Floating Rate Foreign Currency Liability with a Receive-Floating Pay-Floating Cross-Currency Swap -- 8.1.1. Background Information -- 8.1.2. Determining Risk Components to Include in the Hedging Relationship -- 8.1.3. Hedging Relationship Documentation -- 8.1.4. Hedge Effectiveness Assessment -- 8.1.5. Hedge Effectiveness Assessment Performed at the Start of the Hedging Relationship -- 8.1.6. Fair Valuations, Effective/Ineffective Amounts and Cash Flow Calculations -- 8.1.7. Accounting Entries -- 8.1.8. Concluding Remarks -- 8.2. Case Study: Hedging a Fixed Rate Foreign Currency Liability with a Receive-Fixed Pay-Floating Cross-Currency Swap -- 8.2.1. Background Information -- 8.2.2. Hedging Relationship Documentation -- 8.2.3. Hedge Effectiveness Assessment -- 8.2.4. Hedge Effectiveness Assessment Performed at the Start of the Hedging Relationship -- 8.2.5. Fair Valuations, Effective/Ineffective Amounts and Cash Flow Calculations -- 8.2.6. Accounting Entries -- 8.2.7. Concluding Remarks -- 8.3. Case Study: Hedging A Floating Rate Foreign Currency Liability with a Receive-Floating Pay-Fixed Cross-Currency Swap -- 8.3.1. Background Information -- 8.3.2. Hedging Relationship Documentation -- 8.3.3. Hedge Effectiveness Assessment -- 8.3.4. Hedge Effectiveness Assessment Performed at the Start of the Hedging Relationship -- 8.3.5. Fair Valuations, Effective/Ineffective Amounts and Cash Flow Calculations -- 8.3.6. Accounting Entries -- 8.3.7. Concluding Remarks -- 8.4. Case Study: Hedging A Fixed Rate Foreign Currency Liability with a Receive-Fixed Pay-Fixed Cross-Currency Swap -- 8.4.1. Background Information -- 8.4.2. Hedging Relationship Documentation -- 8.4.3. Hedge Effectiveness Assessment.
	Note continued: 8.4.4. Hedge Effectiveness Assessment Performed at the Start of the Hedging Relationship -- 8.4.5. Fair Valuations, Effective/Ineffective Amounts and Cash Flow Calculations -- 8.4.6. Accounting Entries -- 8.4.7. Concluding Remarks -- 9.1. Recognition of Equity Investments In Other Companies -- 9.1.1. Hedging Investments Consolidated under Equity Method -- 9.1.2. Impairment of Equity Investments -- 9.2. Debt Versus Equity Classification of Own Instruments -- 9.2.1. Recognition as a Liability -- 9.2.2. Recognition as an Equity Instrument -- 9.3. Hybrid Securities [2014] Preference Shares From an Issuer's Perspective -- 9.3.1. Contractual Discretion -- 9.3.2. Economic Compulsion -- 9.3.3. Degree of Subordination -- 9.3.4. Legal Form -- 9.3.5. Entity's Historical Trend or Ability to Make Distributions -- 9.4. Convertible Bonds [2014] Issuer's Perspective -- 9.4.1. Convertible Bonds Denominated in the Entity's Functional Currency [2014] Fixed for Fixed -- 9.4.2. Convertible Bonds Denominated in the Entity's Functional Currency [2014] Fixed for Variable -- 9.4.3. Convertible Bonds Denominated in a Foreign Currency -- 9.5. Convertible Bonds [2014] Investor's Perspective -- 9.6. Derivatives on Own Equity Instruments -- 9.6.1. Hedging Own Equity Instruments -- 9.6.2. Derivatives on Own Equity Instruments -- 9.7. Case Study: Accounting For A Stock Lending Transaction -- 9.7.1. Accounting Entries -- 9.7.2. Final Remarks -- 9.8. Case Study: Accounting for a Mandatory Convertible Bond from an Issuer's Perspective -- 9.8.1. Accounting for a Fixed Parity Mandatory Convertible Bond -- 9.8.2. Accounting for a Variable Parity Mandatory Convertible Bond -- 9.9. Case Study: Accounting for a Convertible Bond from an Issuer's Perspective -- 9.9.1. Accounting for a Fixed-for-Fixed Convertible Bond -- 9.9.2. Accounting for a Fixed-for-Variable Convertible Bond -- 9.10. Case Study: Hedging Step-Up Callable Perpetual Preference Shares -- 9.10.1. Accounting versus Credit Impact -- 9.10.2. The Hedging Problem -- 9.10.3. Accounting Entries -- 9.10.4. Concluding Remarks -- 9.11. Case Study: Base Instruments Linked To Debt Instruments -- 9.12. Case Study: Parking Shares Through a Total Return Swap -- 9.12.1. Asset Monetisation Strategy -- 9.12.2. Accounting Entries -- 9.13. Case Study: Hedging an Equity Investment with a Put Option -- 9.13.1. Accounting Treatment of the Put Time Value when Excluded from the Hedging Relationship -- 9.13.2. Accounting Treatment of the Put Time Value when Included in a Hedging Relationship -- 9.14. Case Study: Selling A Forward on Own Shares -- 9.14.1. Accounting Treatment of a Physically Settled Only Forward on Own Shares -- 9.14.2. Accounting Treatment of a Forward on Own Shares Treated as a Derivative -- 10.1. Types And Terminology of Stock-Based Compensation Plans -- 10.1.1. Main Equity-Based Compensation Plans -- 10.1.2. Terminology -- 10.2. Accounting for Equity-Based Compensation Plans -- 10.2.1. Vesting and Non-vesting Conditions -- 10.2.2. Accounting for Stock Option Plans -- 10.2.3. Accounting for Stock Appreciation Rights -- 10.3. Case Study: ABC's Share-Based Plans -- 10.3.1. Main Terms -- 10.3.2. Accounting for ABC's Stock Option Plan -- 10.3.3. Accounting for ABC's Stock Appreciation Rights -- 10.4. Main SOP/SAR Hedging Strategies -- 10.4.1. Underlying Risks in SOPs and SARs -- 10.4.2. Hedging with Treasury Shares -- 10.4.3. Hedging with Equity Swaps -- 10.4.4. Hedging with an Enhanced Equity Swap -- 10.4.5. Hedging with Standard Call Options -- 10.5. Case Study: Hedging a Stock Option Plan with an Equity Swap -- 10.6. Case Study: Hedging an SAR Plan with a Call -- 11.1. Main Commodity Underlyings -- 11.2. Lease, Derivative and Own-Use Contracts -- 11.2.1. Definitions of Lease, Derivative and Own-Use Contracts -- 11.2.2. Use of Similar Contracts for both Own-Use and Trading Purposes -- 11.3. Categorisation According to Settlement Terms -- 11.3.1. Physically Settled Commodity Contracts -- 11.3.2. Net Settled Commodity Contracts -- 11.3.3. Commodity Contracts with Choice of Physical Delivery or Net Settlement -- 11.4. Case Study: Hedging Gold Production with a Forward [2014] Own-Use Application -- 11.5. Case Study: Raising Financing Through a Gold Loan -- 11.6. Case Study: Hedging a Silver Purchase Firm Commitment with a Forward [2014] Fair Value Hedge -- 11.6.1. Hedging Strategy -- 11.6.2. Hedging Relationship Documentation -- 11.6.3. Hedge Effectiveness Assessment -- 11.6.4. Hedge Effectiveness Assessment Performed at the Start of the Hedging Relationship -- 11.6.5. Fair Valuations of Hedging Instrument and Hedged Item -- 11.6.6. Accounting Entries -- 11.7. Case Study: Hedging Commodity Inventory with Futures -- 11.7.1. Recognition of Inventories according to IAS 2 -- 11.7.2. Applying Hedge Accounting to Inventory -- 11.7.3. Background Information -- 11.7.4. Hedging Relationship Documentation -- 11.7.5. Hedge Effectiveness Assessment -- 11.7.6. Hedge Effectiveness Assessment Performed at the Start of the Hedging Relationship -- 11.7.7. Fair Valuations of Hedging Instrument and Hedged Item -- 11.7.8. Accounting Entries -- 11.8. Case Study: Hedging a Highly Expected Purchase Of Oil With Futures and an FX Forward [2014] Cash Flow Hedge -- 11.8.1. Background Information -- 11.8.2. Hedging Relationship Documentation -- 11.8.3. Hedge Effectiveness Assessment -- 11.8.4. Hedge Effectiveness Assessment Performed at Hedging Relationship Inception -- 11.8.5. Fair Valuations of Hedging Instrument and Hedged Item -- 11.8.6. Accounting Entries -- 11.9. Case Study: Airline Jet Fuel Consumption Hedge With Jet Fuel and Crude Oil [2014] Risk Component -- 11.9.1. Background Information -- 11.9.2. Hedging Risk Components -- 11.9.3. Hedging Relationship Documentation -- 11.9.4. Hedge Effectiveness Assessment -- 11.9.5. Hedge Effectiveness Assessment Performed at the Start of the Hedging Relationship -- 11.9.6. Fair Valuations and Accounting Entries on 30 June 20X5 -- 11.9.7. Concluding Remarks -- 12.1. Inflation Markets [2014] Main Participants and Indices -- 12.1.1. Inflation Market Participants -- 12.1.2. Measuring Inflation from Indices -- 12.1.3. Main Inflation Indices -- 12.1.4. Components of a Bond Yield and the Fisher Equation -- 12.1.5. Breakeven Inflation -- 12.2. Inflation-Linked Bonds -- 12.3. Inflation Derivatives -- 12.3.1. Zero-Coupon Inflation Swaps -- 12.3.2. Non-cumulative Periodic Inflation Swaps -- 12.3.3. Cumulative Periodic Inflation Swaps -- 12.3.4. Inflation Caps and Floors -- 12.4. Inflation Risk Under IH(S 9 -- 12.4.1. Hybrid Instruments -- 12.4.2. Hedging Inflation as a Risk Component -- 12.5. Case Study: Hedging Revenues Linked To Inflation -- 12.5.1. Background -- 12.5.2. Hedging Relationship Documentation -- 12.5.3. Hedge Effectiveness Assessment [2014] Hypothetical Derivative -- 12.5.4. Hedge Effectiveness Assessment Performed at Start of the Hedging Relationship -- 12.5.5. Fair Valuations of the ILS and the Hypothetical Derivative -- 12.5.6. Accounting Entries -- 12.5.7. Concluding Remarks -- 12.6. Matching An Inflation-Linked Asset with a Floating Rate Liability -- 13.1. Positive Influence on The Profit or Loss Statement -- 13.2. Substantial Operational Resources -- 13.3. Limited Access to Hedging Alternatives -- 13.4. Risk of Reassessment of Highly Probable Transactions -- 13.5. Low Compatibility With Portfolio Hedging -- 13.6. Final Remarks.
Subject	Financial instruments -- Accounting -- Standards.
	Derivative securities -- Accounting.
	Hedging (Finance) -- Accounting.
	Instruments dérivés (Finances) -- Comptabilité.
	Couverture (Finances) -- Comptabilité.
	Derivative securities -- Accounting
	Financial instruments -- Accounting -- Standards
	Hedging (Finance) -- Accounting
Other Form:	Print version: Ramirez, Juan, 1961- Accounting for derivatives. Second edition. West Sussex, United Kingdom ; New York : John Wiley & Sons, Inc., 2015 9781118817971 (DLC) 2014045650
ISBN	9781118817964 (epub)
	1118817966 (epub)
	9781118817940 (pdf)
	111881794X (pdf)
	9781119065876
	1119065879
	1118817974 (hardback)
	9781118817971 (hardback)
	(hardback)
Standard No.	9781118817964

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