- 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.