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ASC 815 — Derivatives and Hedging

ASC 815, Derivatives and Hedging, provides comprehensive guidance on derivative and hedging transactions. It sets forth the definition of a derivative instrument and specifies how to account for such instruments, including derivatives embedded in hybrid instruments. In addition, ASC 815 establishes when reporting entities, in certain limited, well-defined circumstances, may apply hedge accounting to a relationship involving a designated hedging instrument and hedged exposure. Hedge accounting provides an alternative, special way of accounting for such relationships. ASC 815 also provides guidance on how reporting entities determine whether an instrument is (1) indexed to the reporting entity’s own stock and (2) considered to be settled in the reporting entity’s own stock. Such a determination will dictate whether an instrument should  be accounted for as debt or equity and the appropriate accounting for the instrument. Finally, ASC 815 addresses the accounting for non-exchange-traded weather derivatives. The Codification also provides certain industry-specific derivatives and hedging guidance, but such guidance is included in the industry sections of the Codification.


Related resources

See our comprehensive collection of news and publications related to derivatives and hedging.


International guidance

For the IASB's guidance on this topic, see IAS 39, Financial Instruments: Recognition and Measurement.



The full text of ASC 815 can be found in the FASB Accounting Standards Codification (link to the FASB's Web site; registration required). Also, the full text of the Codification and Deloitte-authored Q&As related to the Codification are available in the Deloitte Accounting Research Tool (DART) Web site (subscription required).

ASC 815 comprises the following eight Subtopics:

  • Overall
  • Embedded Derivatives
  • Hedging—General
  • Fair Value Hedges
  • Cash Flow Hedges
  • Net Investment Hedges
  • Contracts in Entity's Own Equity
  • Weather Derivatives

Below is an overview of each Subtopic.


815-10 Overall

ASC 815-10 notes that it "defines derivative instrument, addresses the pervasive scope of this Topic, and specifies the primary accounting for derivative instruments within this Topic's scope." It further notes the following information regarding the entire 815 Topic:


This Topic generally provides for matching the timing of gain or loss recognition on the hedging instrument with the recognition of either of the following:

  1. The changes in the fair value of the hedged asset or liability that are attributable to the hedged risk
  2. The earnings effect of the hedged forecasted transaction.

815-15 Embedded Derivatives

ASC 815-15 provides guidance for embedded derivatives that may be included in "[c]ontracts that do not in their entirety meet the definition of a derivative instrument, such as bonds, insurance policies, and leases."


815-20 Hedging—General

ASC 815-20 notes the following:


This Subtopic provides guidance on accounting for and financial reporting of three types of hedging relationships: fair value hedges, cash flow hedges, and hedges of a net investment in a foreign operation.

815-25 Fair Value Hedges

ASC 815-25 provides incremental guidance to ASC 815-20 on accounting for and financial reporting of fair value hedges.


815-30 Cash Flow Hedges

ASC 815-30 provides incremental guidance to ASC 815-20 on accounting for and financial reporting of cash flow hedges.


815-35 Net Investment Hedges

ASC 815-35 provides incremental guidance to ASC 815-20 on accounting for and financial reporting of hedges of a net investment in a foreign operation.


815-40 Contracts in Entity's Own Equity

ASC 815-40 notes the following:


For a number of business reasons, an entity may enter into contracts that are indexed to, and sometimes settled in, its own stock. This Subtopic provides guidance on accounting for such contracts. Examples of these contracts include put and call options (both written and purchased) and forward contracts (for both sales and purchases). These contracts may be settled using a variety of settlement methods, or the issuing entity or counterparty may have a choice of settlement methods. The contracts may be either freestanding or embedded in another financial instrument.

815-45 Weather Derivatives

ASC 815-45 provides guidance on the financial accounting and reporting for weather derivatives.

Content from the FASB Accounting Standards Codification® included at is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116, and is reproduced with permission.

FASB Accounting Standards Updates

    The following ASUs amended the guidance in this Topic:

    Proposed FASB Accounting Standards Updates

    Correction list for hyphenation

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