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- US GAAP
This Roadmap provides a comprehensive discussion of the guidance in ASC 815 on the
identification, classification, measurement, and presentation and disclosure of
derivative instruments, including embedded derivatives.
Accounting for derivatives in accordance with ASC 815 is one of the most complex
areas of U.S. GAAP, primarily because of the nuances involved in evaluating whether
an instrument meets the definition of a derivative and whether a scope exception is
available. The identification of possible embedded derivatives in a host contract
also requires careful evaluation. This Roadmap is intended to help entities navigate
the applicable accounting and financial reporting guidance and arrive at supportable
accounting conclusions. It is assumed in this Roadmap that an entity has adopted ASU
2016-02 (on leases), ASU 2017-12 (on targeted improvements to accounting for hedging
activities), ASU 2018-12 (on targeted improvements to accounting for long-duration
contracts), and ASU 2020-06 (on an issuer’s accounting for convertible debt);
however, these ASUs do not have a significant impact on the guidance discussed in
this publication.