# ASC 815-10-35: Derivatives and Hedging — Overall — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/815/10/#35-subsequent-measurement) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:35:09.320Z to 2026-09-10T01:35:09.320Z Record version: sha256:fff333ba5a92da05f7530cd8db8f4300645d9ae2fa65d0f5f13ca40d9a11a05a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 815-10-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/815/10/#35-subsequent-measurement) SEC content: no ##### [815-10-35-1](https://asc.understandingaccounting.org/asc/815/10/#815-10-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:09.320Z to 2026-09-10T01:35:09.320Z Record version: sha256:6a21915074cfedae11dc559b05150df512639e5c28fd13cc8341e6bc72863da3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All derivative instruments shall be measured subsequently at [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date."). ##### [815-10-35-1A](https://asc.understandingaccounting.org/asc/815/10/#815-10-35-1A) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:09.320Z to 2026-09-10T01:35:09.320Z Record version: sha256:230e3504a9ec6978314ba38befc5bd1369f076d29652648efdca26004496e2cc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As a practical expedient, a receive-variable, pay-fixed interest rate swap for which the simplified hedge accounting approach (see paragraphs [815-20-25-133 through 25-138](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-133) for scope) is applied may be measured subsequently at settlement value instead of fair value. ##### [815-10-35-1B](https://asc.understandingaccounting.org/asc/815/10/#815-10-35-1B) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:09.320Z to 2026-09-10T01:35:09.320Z Record version: sha256:05a5d6232407f02516962def5f06235be36d8822af3a7bacfff6ee137ceb94f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The primary difference between settlement value and fair value is that [nonperformance risk](https://asc.understandingaccounting.org/glossary/n/#nonperformance-risk "The risk that an entity will not fulfill an obligation. Nonperformance risk includes, but may not be limited to, the reporting entity's own credit risk.") is not considered in determining settlement value. One approach for estimating the receive-variable, pay-fixed interest rate swap's settlement value is to perform a present value calculation of the swap's remaining estimated cash flows using a valuation technique that is not adjusted for nonperformance risk. ##### [815-10-35-1C](https://asc.understandingaccounting.org/asc/815/10/#815-10-35-1C) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:09.320Z to 2026-09-10T01:35:09.320Z Record version: sha256:83e2e393a437c13d83a98dfe2c8f2ff54222615b0fb237421e54acf3f3b2816b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If any of the conditions in paragraph [815-20-25-131D](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-131D) for applying the simplified hedge accounting approach subsequently cease to be met or the relationship otherwise ceases to qualify for hedge accounting, the General Subsections of this Topic shall apply at the date of change and on a prospective basis. For example, if the related variable-rate borrowing is prepaid without terminating the receive-variable, pay-fixed interest rate swap, the gain or loss on the swap in accumulated other comprehensive income shall be reclassified to earnings in accordance with paragraphs [815-30-40-1 through 40-6](https://asc.understandingaccounting.org/asc/815/30/#815-30-40-1) with the swap measured at fair value on the date of change and subsequent changes in fair value reported in earnings in accordance with paragraph [815-10-35-2](https://asc.understandingaccounting.org/asc/815/10/#815-10-35-2). Similarly, if the receive-variable, pay-fixed interest rate swap is terminated early without the related variable-rate borrowing being prepaid, the gain or loss on the swap in accumulated other comprehensive income shall be reclassified to earnings in accordance with paragraphs [815-30-40-1 through 40-6](https://asc.understandingaccounting.org/asc/815/30/#815-30-40-1) . ##### [815-10-35-2](https://asc.understandingaccounting.org/asc/815/10/#815-10-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:09.320Z to 2026-09-10T01:35:09.320Z Record version: sha256:5a1d1cf3bdf9967879f86554008150ee2dcae3110ac24dfcc28811e5f0213ec7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accounting for changes in the fair value (that is, gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, if so, on the reason for holding it. Subtopic 815-20 discusses the accounting for the gain or loss on a derivative instrument that is designated as a hedging instrument. Except as noted in the following paragraph, the gain or loss on a derivative instrument not designated as a hedging instrument shall be recognized currently in earnings. ##### [815-10-35-3](https://asc.understandingaccounting.org/asc/815/10/#815-10-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:09.320Z to 2026-09-10T01:35:09.320Z Record version: sha256:d08ccf64e0a18569b28fb7e53823fb07eec61744b80d1713a852680a2fbd4314 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that does not report earnings as a separate caption in a statement of financial performance (for example, a not-for-profit entity \[NFP\] or a defined benefit pension plan) shall recognize the gain or loss on a nonhedging derivative instrument as a change in net assets in the period of change. #### Forward Commitment Dollar Rolls ##### [815-10-35-4](https://asc.understandingaccounting.org/asc/815/10/#815-10-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:09.320Z to 2026-09-10T01:35:09.320Z Record version: sha256:51fd7fd8d6b12edc904854076a5c50127eb2c1a4d3aacce769280d5feb2850d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [forward commitment dollar roll](https://asc.understandingaccounting.org/glossary/f/#forward-commitment-dollar-roll "See Government National Mortgage Association Rolls.") that is not subject otherwise to this Subtopic's provisions shall be measured subsequently at fair value. ### Certain Contracts on Debt and Equity Securities ##### [815-10-35-5](https://asc.understandingaccounting.org/asc/815/10/#815-10-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:09.320Z to 2026-09-10T01:35:09.320Z Record version: sha256:a0e919a5bb5e0242af33bae77f626c7dcc29c0a05cea24b5d54b3f534760dcfa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Forward contracts and purchased options on debt securities within the scope of this Subsection shall be measured subsequently according to their initial classification as follows: 1. a Held to maturity: 1. 1 Changes in the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the forward contract or purchased option shall not be recognized. Credit losses on the underlying securities in a forward contract shall be recorded through an allowance for credit losses in accordance with Subtopic 326-20 on financial instruments measured at amortized cost. Credit losses on the underlying securities in a purchased option shall be recorded through an allowance for credit losses in accordance with Subtopic 326-20 and shall be limited by the amount of the option premium. 2. 2 Debt securities purchased under a forward contract shall be recorded at the forward contract price at the settlement date. 3. 3 Debt securities purchased by exercising an option shall be recorded at the option strike price plus any remaining carrying amount for the option premium at the exercise date. 4. 4 If an option expires worthless and the same debt security is purchased in the market, the security shall be recorded at its market price plus any remaining carrying amount for the option premium. 5. 5 If an entity does not take delivery under the forward contract or purchase the same security in the market if the option expires worthless, the entity's intent to hold other debt securities to maturity will be called into question. 2. b Available for sale: 1. 1 Changes in the fair value of the forward contract or purchased option shall be recognized as part of the separate component of shareholders' equity under Topic 320 as they occur. Credit losses on the underlying securities in a forward contract shall be recorded through an allowance for credit losses in accordance with Subtopic 326-30 on measuring credit losses on available-for-sale debt securities. Credit losses on the underlying securities in a purchased option shall be recorded through an allowance for credit losses in accordance with Subtopic 326-30 and shall be limited by the amount of the option premium. 2. 2 Debt securities purchased under a forward contract shall be recorded at their fair values at the settlement date. 3. 3 Debt securities purchased by exercising an option shall be recorded at the option strike price plus the fair value of the option at the exercise date. 4. 4 If the option expires worthless and the same debt security is purchased in the market, the security shall be recorded at its market price plus any remaining carrying amount for the option premium. 3. c [Trading](https://asc.understandingaccounting.org/glossary/t/#trading "An activity involving securities sold in the near term and held for only a short period of time. The term trading contemplates a holding period generally measured in hours and days rather than months or years. See paragraph 948-310-40-1 for clarification of the term trading for a mortgage banking entity."): 1. 1 Changes in the fair value of the forward contract or purchased option shall be recognized in earnings as they occur. 2. 2 Debt securities purchased under a forward contract or by exercising an option shall be recorded at their fair values at the settlement date. ##### [815-10-35-6](https://asc.understandingaccounting.org/asc/815/10/#815-10-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:35:09.320Z to 2026-09-10T01:35:09.320Z Record version: sha256:5161809e0fa19db688cfb5e9620b631f5427245130955a31fd51a5da0959c521 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Changes in the fair value of forward contracts and purchased options on equity securities within the scope of this Subsection shall be recognized in earnings as they occur. Changes in observable price or impairment of forward contracts and purchased options on equity securities without readily determinable fair value within the scope of this Subsection measured in accordance with paragraph [321-10-35-2](https://asc.understandingaccounting.org/asc/321/10/#321-10-35-2) shall be recognized in earnings as they occur. A change in observable price or impairment of the underlying securities of forward contracts and purchased options on equity securities shall result in a remeasurement of the entire fair value of the forward contracts and purchased options as of the date that the observable transaction took place. Equity securities within the scope of this Subsection purchased under a forward contract or by exercising an option shall be recorded at their fair values at the settlement date.