8.1 Background

Under U.S. GAAP, the primary sources of guidance on derivative instruments are ASC 815-10, ASC 815-15, and ASC 815-40. Under IFRS® Accounting Standards, the primary sources of such guidance are IFRS 9 and IAS 32. The foundational concepts related to derivatives are similar in the two sets of standards. For example, both standards require derivatives to be accounted for at fair value, with changes in fair value recorded through earnings, unless the contract is designated as part of a hedging relationship. However, the definition of a derivative is narrower under U.S. GAAP than it is under IFRS Accounting Standards and, as a result, more instruments may meet the definition under IFRS Accounting Standards.