{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/815/15/#15-scope-and-scope-exceptions","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","topic":"815","topic_title":"Derivatives and Hedging","subtopic":"815-15","subtopic_title":"Embedded Derivatives","section":{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":"Entities","paragraphs":[{"citation":"815-15-15-1","para":"15-1","html":"
The guidance in this Subtopic applies to all entities.
","snippet":"The guidance in this Subtopic applies to all entities.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1ed3cb17d190ef0d244ce793a0e79b1149ca72f0c09a6f9637ad82e5cd4cf5d6","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:beb27178fb48c3bd5c0e40ca876174b54a033d9e0eb03970b4d7cdb3a99c50e8","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}},{"block":null,"heading":"Instruments","paragraphs":[{"citation":"815-15-15-2","para":"15-2","html":"
The guidance in this Subtopic applies only to contracts that do not meet the definition of a derivative instrument in their entirety.
","snippet":"The guidance in this Subtopic applies only to contracts that do not meet the definition of a derivative instrument in their entirety.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a560abd1c82798a750adad4f6789a487ea99992050b29032adf5869789b784c5","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}},{"citation":"815-15-15-3","para":"15-3","html":"
The guidance in this Subtopic does not apply to any of the following items, as discussed further in this Section:
  1. a
    Normal purchases and normal sales contracts
  2. b
    Unsettled foreign currency transactions
  3. c
    Plain-vanilla servicing rights
  4. d
    Features involving certain aspects of credit risk
  5. e
    Features involving certain currencies.
","snippet":"The guidance in this Subtopic does not apply to any of the following items, as discussed further in this Section:\n(a) Normal purchases and normal sales contracts\n(b) Unsettled foreign currency transactions\n(c) Plain-vani…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dec326062543471b3b0f7a65cdf701bfdeb1bde924866035f7629bb899dd9d2f","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}},{"citation":"815-15-15-4","para":"15-4","html":"
A contract that meets the definition of a derivative instrument in its entirety but qualifies for the normal purchases and normal sales scope exception as discussed beginning in paragraph 815-10-15-22 shall not also be assessed under paragraph 815-15-25-1.
","snippet":"A contract that meets the definition of a derivative instrument in its entirety but qualifies for the normal purchases and normal sales scope exception as discussed beginning in paragraph 815-10-15-22 shall not also be a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b71cf5ea88e737d33718b03232e753f4205af1f3fce071370e09227ac9f8af36","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}},{"citation":"815-15-15-5","para":"15-5","html":"
Unsettled foreign currency transactions, including financial instruments, shall not be considered to contain embedded foreign currency derivatives under this Subtopic if the transactions meet all of the following criteria:
  1. a
    They are monetary items.
  2. b
    They have their principal payments, interest payments, or both denominated in a foreign currency.
  3. c
    They are subject to the requirement in Subtopic 830-20 to recognize any foreign currency transaction gain or loss in earnings.
","snippet":"Unsettled foreign currency transactions, including financial instruments, shall not be considered to contain embedded foreign currency derivatives under this Subtopic if the transactions meet all of the following criteri…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:33f6a422023bc037d8a1b649fdaa6892bb6fa4a6f43478a734957de12d447f60","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}},{"citation":"815-15-15-6","para":"15-6","html":"
The proscription in paragraph 815-15-15-5 applies to available-for-sale or trading debt securities that have cash flows denominated in a foreign currency.
","snippet":"The proscription in paragraph 815-15-15-5 applies to available-for-sale or trading debt securities that have cash flows denominated in a foreign currency.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f2f53ae8c334226ef2a8456b6134524eab97380be9f1a40b37c36f4553305c4a","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}},{"citation":"815-15-15-7","para":"15-7","html":"
Plain-vanilla servicing rights, which involve an obligation to perform servicing and the right to receive fees for performing that servicing, do not contain an embedded derivative that would be separated from those servicing rights and accounted for as a derivative instrument.
","snippet":"Plain-vanilla servicing rights, which involve an obligation to perform servicing and the right to receive fees for performing that servicing, do not contain an embedded derivative that would be separated from those servi…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:475c394b722b0c2b2ee6b1ed18bf419c1e20ab58c12e64d11fa07f552a1e8010","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}},{"citation":"815-15-15-8","para":"15-8","html":"
Paragraph superseded by Accounting Standards Update No. 2010-11.
","snippet":"Paragraph superseded by Accounting Standards Update No. 2010-11.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1b6d5bd822c9be853fd4d33c8a416ca007daeb619f3f5b5593ac534f278bdd3a","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}},{"citation":"815-15-15-9","para":"15-9","html":"
The transfer of credit risk that is only in the form of subordination of one financial instrument to another (such as the subordination of one beneficial interest to another tranche of a securitization, thereby redistributing credit risk) is an embedded derivative feature that shall not be subject to the application of paragraph 815-10-15-11 and Section 815-15-25. Only the embedded credit derivative feature created by subordination between the financial instruments is not subject to the application of paragraph 815-10-15-11 and Section 815-15-25. However, other embedded credit derivative features (for example, those related to credit default swaps on a referenced credit) would be subject to the application of paragraph 815-10-15-11 and Section 815-15-25 even if their effects are allocated to interests in tranches of securitized financial instruments in accordance with those subordination provisions. Consequently, the following circumstances (among others) would not qualify for the scope exception and are subject to the application of paragraph 815-10-15-11 and Section 815-15-25 for potential bifurcation:
  1. a
    An embedded derivative feature relating to another type of risk (including another type of credit risk) is present in the securitized financial instruments.
  2. b
    The holder of an interest in a tranche of that securitized financial instrument is exposed to the possibility (however remote) of being required to make potential future payments (not merely receive reduced cash inflows) because the possibility of those future payments is not created by subordination. (Note, however, that the securitized financial instrument may involve other tranches that are not exposed to potential future payments and, thus, those other tranches might qualify for the scope exception.)
  3. c
    The holder owns an interest in a single-tranche securitization vehicle; therefore, the subordination of one tranche to another is not relevant.
","snippet":"The transfer of credit risk that is only in the form of subordination of one financial instrument to another (such as the subordination of one beneficial interest to another tranche of a securitization, thereby redistrib…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:048b0249a2752d9ee43aaeaa4eb12af1dff06f8f36a74b9c91a70a11caea4f86","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}},{"citation":"815-15-15-10","para":"15-10","html":"
An embedded foreign currency derivative shall not be separated from the host contract and considered a derivative instrument under paragraph 815-15-25-1 if all of the following criteria are met:
  1. a
    The host contract is not a financial instrument.
  2. b
    The host contract requires payment(s) denominated in any of the following currencies:
    1. 1
      The functional currency of any substantial party to that contract
    2. 2
      The currency in which the price of the related good or service that is acquired or delivered is routinely denominated in international commerce (for example, the U.S. dollar for crude oil transactions)
    3. 3
      The local currency of any substantial party to the contract
    4. 4
      The currency used by a substantial party to the contract as if it were the functional currency because the primary economic environment in which the party operates is highly inflationary (as discussed in paragraph 830-10-45-11).
  3. c
    Other aspects of the embedded foreign currency derivative are clearly and closely related to the host contract.
The evaluation of whether a contract qualifies for the scope exception in this paragraph shall be performed only at inception of the contract.
","snippet":"An embedded foreign currency derivative shall not be separated from the host contract and considered a derivative instrument under paragraph 815-15-25-1 if all of the following criteria are met:\n(a) The host contract is …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:689aad1254f4a256422d69151130c7576972481c7a59f7d9ae072ce52c8f9136","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}},{"citation":"815-15-15-11","para":"15-11","html":"
The decision about the currency of the primary economic environment in which a counterparty to a contract operates can be based on available information and reasonable assumptions about the counterparty; representations from the counterparty are not required.
","snippet":"The decision about the currency of the primary economic environment in which a counterparty to a contract operates can be based on available information and reasonable assumptions about the counterparty; representations …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d18cd0da66b17d337c7a2f736a104234c27deffe65bfc2b0890f3324ad178a7f","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}},{"citation":"815-15-15-12","para":"15-12","html":"
When determining who is a substantial party to the contract for purposes of applying paragraph 815-15-15-10(b)(1), the entity shall do both of the following:
  1. a
    Consider all facts and circumstances pertaining to that contract (including whether the contracting party possesses the requisite knowledge, resources, and technology to fulfill the contract without relying on related parties)
  2. b
    Look through the legal form to evaluate the substance of the underlying relationships.
","snippet":"When determining who is a substantial party to the contract for purposes of applying paragraph 815-15-15-10(b)(1), the entity shall do both of the following:\n(a) Consider all facts and circumstances pertaining to that co…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b0e45de58a14684f4d298f60f7cead3e91e89d17d255236c130b1a55ff709bb9","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}},{"citation":"815-15-15-13","para":"15-13","html":"
Example 1 (see paragraph 815-15-55-83) illustrates the application of this guidance.
","snippet":"Example 1 (see paragraph 815-15-55-83) illustrates the application of this guidance.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:78c7c0a9529dbc6967ead832968a102c4f5a8ead58dc829753885a2ed28eac00","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}},{"citation":"815-15-15-14","para":"15-14","html":"
The application of the phrase routinely denominated in international commerce in paragraph 815-15-15-10(b)(2) shall be based on how similar transactions for a certain product or service are routinely structured around the world, not just in one local area. If similar transactions for a certain product or service are routinely denominated in international commerce in various different currencies, the scope exception in that paragraph shall not apply to any of those similar transactions.
","snippet":"The application of the phrase routinely denominated in international commerce in paragraph 815-15-15-10(b)(2) shall be based on how similar transactions for a certain product or service are routinely structured around th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e0d7f388d71572df0f6aaa5cd394306bd4394c897b40e563b3013e42cb792ea1","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}},{"citation":"815-15-15-15","para":"15-15","html":"
The guidance in paragraph 815-15-15-10 relating to embedded foreign currency derivatives within nonfinancial contracts relates to all embedded foreign currency caps or floors within such contracts. That guidance does not relate to all embedded foreign currency options within such contracts (such as an embedded foreign currency option that merely introduces a cap or floor on the functional currency equivalent price under a purchase contract). The embedded foreign currency cap or floor (or combination thereof) within a nonfinancial contract shall be considered clearly and closely related to the host nonfinancial contract, and thus not be accounted for separately as a derivative instrument, only if all of the following criteria are met:
  1. a
    The nonfinancial contract requires payment(s) denominated in any of the currencies permitted by paragraphs 815-15-15-10(b).
  2. b
    The embedded cap or floor (or combination thereof) does not contain leverage features.
  3. c
    The embedded cap or floor (or combination thereof) does not represent a written or net written option.
","snippet":"The guidance in paragraph 815-15-15-10 relating to embedded foreign currency derivatives within nonfinancial contracts relates to all embedded foreign currency caps or floors within such contracts. That guidance does not…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ddfd4f29b3ee9df172bf5f4889f341719a0914ebb397e263009ff8957a43fad7","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}},{"citation":"815-15-15-16","para":"15-16","html":"
When an embedded cap or floor (or combination thereof) represents a purchased or net purchased option to one party to the contract, it represents a written or net written option to the counterparty to that contract. In that circumstance, that counterparty does not qualify for the paragraph 815-15-15-10 exclusion because the criterion in (c) in the preceding paragraph would not be met (due to the embedded foreign currency cap or floor [or combination thereof] representing a written or net written option).
","snippet":"When an embedded cap or floor (or combination thereof) represents a purchased or net purchased option to one party to the contract, it represents a written or net written option to the counterparty to that contract. In t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:78db6f26dce4e03c5473eb93f9e81444abf1fe30e503084ff82694c722a7e3f6","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}},{"citation":"815-15-15-17","para":"15-17","html":"
If the embedded derivative represented a zero-cost collar (as described beginning in paragraph 815-20-25-88), both parties to the contract would meet the criterion in paragraph 815-15-15-15(c) and be eligible to qualify for the exclusion in paragraph 815-15-15-10.
","snippet":"If the embedded derivative represented a zero-cost collar (as described beginning in paragraph 815-20-25-88), both parties to the contract would meet the criterion in paragraph 815-15-15-15(c) and be eligible to qualify …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:25afbad91c75aa3e164c01d4fd4a2f57abca1dae75c0a87ee70c5c00a4ccc26f","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}},{"citation":"815-15-15-18","para":"15-18","html":"
If a financial or nonfinancial contract contained an option that allowed the payer to remit funds in an equivalent amount of a currency other than the functional currency of a substantial party to the contract at the payment date, that option shall not be separated from the host contract because the option merely allows the payer to make an equivalent payment in a choice of currencies (based on current spot prices).
","snippet":"If a financial or nonfinancial contract contained an option that allowed the payer to remit funds in an equivalent amount of a currency other than the functional currency of a substantial party to the contract at the pay…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f3b06266c384a21626139e39c2f05568ad8ade78e81d277b05883e12c16aef99","downloaded_from":"2026-09-10T01:36:03.191Z","last_downloaded_at":"2026-09-10T01:36:03.191Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480212","source_sha256":"0df0259bf409b556901b778093540df13d11b9d4bf439f8623ce5cc99f7c5b6f"}},{"citation":"815-15-15-19","para":"15-19","html":"
The guidance in paragraphs
815-15-15-15 through 15-18
is not meant to address every possible type of foreign currency option that may be embedded in a nonfinancial contract, and an analogy to that guidance may not be appropriate for such foreign currency options.
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Although the scope exception in paragraph 815-15-15-10 does not apply to financial instruments, that paragraph applies if a normal insurance contract involves payment in the functional currency of either of the two parties to the contract.
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Paragraph 815-15-15-10 applies also to a normal insurance contract if it involves payment in the local currency of the country in which the loss is incurred, irrespective of the functional currencies of the parties to the transaction.
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