[ninja71]

NINJA Question –

I came across two conflicting information between Ninja FAR notes and Roger book.

According to Roger, all derivatives other than ones that are qualified as hedges are required to be reported at fair value with gain or loss going to Income Statement.

However, in Ninja FAR notes, derivatives other than hedging instruments are reported based on how they fit into different categories (Trading vs. Available for sale).

I am pretty confused at this moment. Can somebody help me clarify which one is correct or how the two fit in together?

Thanks!

[marqzho]

FAS133 “For a derivative not designated as a hedging instrument, the gain or loss is recognized in
earnings in the period of change”

REG 90
FAR 95
AUD 98
BEC 84

[ninja71]

ASC 815-10-35-2 says, “the gain or loss on a derivative instrument not designated as a hedging instrument shall be recognized currently in earnings.”

However, ASC 815-10-35-5 also says, for forward contracts and purchased options on debt and equity securities, we should follow treatments applicable to held-to-maturity, trading, and available for sale.

My guess is the general rule is recognizing gain and loss in earnings except for forward contracts and purchased options on debt and equity securities. Do I understand it correctly?

[Author]

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