This PwC guide offers a comprehensive discussion of the accounting guidance for derivatives and hedging activities contained in ASC 815, Derivatives and Hedging. Domestically and internationally, the volume, variety, and inherent complexity of derivative transactions have steadily increased and the nature of hedging activities continues to evolve. In practice, hedge accounting is difficult to apply and leads to divergent interpretations. For this reason, the use of derivative instruments and related hedging activities still attracts heightened scrutiny from regulators and other interested parties.
In this guide we attempt to clarify a complex area of accounting by providing relevant guidance and examples. We also add our own perspective throughout, based on both our analysis of the guidance and our experience in applying it.