# ASC 815-30-35: Derivatives and Hedging — Cash Flow Hedges — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/815/30/#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): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:7c31b10cb91ae9daa146ba72fa3fc7010120280b6aff4969fe68dd5db4003a5b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 815-30-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/815/30/#35-subsequent-measurement) SEC content: no ##### [815-30-35-1](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:9983abbf7adb9bb71ff147e5d8839d16245873314968fd5862b521cefba26bc8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Section is organized as follows: 1. a Subsequent recognition and measurement of gains and losses on hedging instrument 2. b Reclassifications from accumulated other comprehensive income into earnings 3. c Hedging relationship's timing that involves uncertainty within a range 4. d [Subparagraph superseded by Accounting Standards Update No. 2017-12](https://asc.understandingaccounting.org/updates/asu-2017-12/). #### Subsequent Recognition and Measurement of Gains and Losses on Hedging Instrument ##### [815-30-35-2](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:2f3c4549aea48aab9bddaf6f0085b5fce41ae4bf3009b0e4a55ebd55b84f4928 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-12](https://asc.understandingaccounting.org/updates/asu-2017-12/). ##### [815-30-35-3](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:0c4e65a36f729d4ce381a16aef4d19abec897d93b61553280dc2bfc074b4b88d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When the relationship between the hedged item and hedging instrument is highly effective at achieving offsetting changes in cash flows attributable to the hedged risk, an entity shall record in [other comprehensive income](https://asc.understandingaccounting.org/glossary/o/#other-comprehensive-income "Revenues, expenses, gains, and losses that under generally accepted accounting principles (GAAP) are included in comprehensive income but excluded from net income.") the entire change in the fair value of the designated hedging instrument that is included in the assessment of hedge effectiveness. More specifically, a qualifying [cash flow hedge](https://asc.understandingaccounting.org/glossary/c/#cash-flow-hedge "A hedge of the exposure to variability in the cash flows of a recognized asset or liability, or of a forecasted transaction, that is attributable to a particular risk.") shall be accounted for as follows: 1. a An entity's defined risk management strategy for a particular hedging relationship may exclude a specific component of the gain or loss, or related cash flows, on the hedging derivative from the assessment of hedge effectiveness (as discussed in paragraphs [815-20-25-81 through 25-83B](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-81)). That excluded component of the gain or loss shall be recognized in earnings either through an amortization approach in accordance with paragraph [815-20-25-83A](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-83A) or through a mark-to-market approach in accordance with paragraph [815-20-25-83B](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-83B). Under either approach, the amount recognized in earnings for an excluded component shall be presented in the same income statement line item as the earnings effect of the hedged item in accordance with paragraph [815-20-45-1A](https://asc.understandingaccounting.org/asc/815/20/#815-20-45-1A). For example, if the effectiveness of a hedging relationship with an option is assessed based on changes in the option's [intrinsic value](https://asc.understandingaccounting.org/glossary/i/#intrinsic-value "The amount by which the fair value of the underlying stock exceeds the exercise price of an option. For example, an option with an exercise price of $20 on a stock whose current market price is $25 has an intrinsic value of $5. (A nonvested share may be described as an option on that share with an exercise price of zero. Thus, the fair value of a share is the same as the intrinsic value of such an option on that share.)"), the changes in the option's [time value](https://asc.understandingaccounting.org/glossary/t/#time-value "The portion of the fair value of an option that exceeds its intrinsic value. For example, a call option with an exercise price of $20 on a stock whose current market price is $25 has intrinsic value of $5. If the fair value of that option is $7, the time value of the option is $2 ($7 - $5).") would be excluded from the assessment of hedge effectiveness and either may be recognized in earnings through an amortization approach in accordance with paragraph [815-20-25-83A](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-83A) or currently in earnings in accordance with paragraph [815-20-25-83B](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-83B). 2. b Amounts in accumulated other comprehensive income related to the derivative designated as a hedging instrument included in the assessment of hedge effectiveness are reclassified to earnings in the same period or periods during which the hedged forecasted transaction affects earnings in accordance with paragraphs [815-30-35-38 through 35-41](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-38) and presented in the same income statement line item as the earnings effect of the hedged item in accordance with paragraph [815-20-45-1A](https://asc.understandingaccounting.org/asc/815/20/#815-20-45-1A). The balance in accumulated other comprehensive income associated with the hedged [transaction](https://asc.understandingaccounting.org/glossary/t/#transaction "An external event involving transfer of something of value (future economic benefit) between two (or more) entities. (See FASB Concepts Statement No. 6, Elements of Financial Statements.)(P) December 16, 2024; (N) December 16, 2025105-10-65-9An external event involving transfer of something of value (future economic benefit) between two (or more) entities.") shall be the cumulative gain or loss on the derivative instrument from inception of the hedge less all of the following: 1. 1 [Subparagraph superseded by Accounting Standards Update No. 2017-12](https://asc.understandingaccounting.org/updates/asu-2017-12/). 2. 1a The derivative instrument's gains or losses previously reclassified from accumulated other comprehensive income into earnings pursuant to paragraphs [815-30-35-38 through 35-41](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-38) . 3. 1b The cumulative amount amortized to earnings related to excluded components accounted for through an amortization approach in accordance with paragraph [815-20-25-83A](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-83A). 4. 1c The cumulative change in fair value of an excluded component for which changes in fair value are recorded currently in earnings in accordance with paragraph [815-20-25-83B](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-83B). 5. 2 [Subparagraph superseded by Accounting Standards Update No. 2017-12](https://asc.understandingaccounting.org/updates/asu-2017-12/). If hedge accounting has not been applied to a cash flow hedging relationship in a previous effectiveness assessment period because the entity's retrospective evaluation indicated that the relationship had not been highly effective in achieving offsetting changes in cash flows in that period, the cumulative gain or loss on the derivative referenced in (b) would exclude the gains or losses occurring during that period. That situation may arise if the entity had previously determined, for example, under a regression analysis or other appropriate statistical analysis approach used for prospective assessments of hedge effectiveness, that there was an expectation in which the hedging relationship would be highly effective in future periods. Consequently, the hedging relationship continued even though hedge accounting was not permitted for a specific previous effectiveness assessment period. 3. c [Subparagraph superseded by Accounting Standards Update No. 2017-12](https://asc.understandingaccounting.org/updates/asu-2017-12/). 4. d If a non-option-based contract is the hedging instrument in a cash flow hedge of the variability of the functional-currency-equivalent cash flows for a recognized foreign-currency-denominated asset or liability that is remeasured at spot exchange rates under paragraph [830-20-35-1](https://asc.understandingaccounting.org/asc/830/20/#830-20-35-1), an amount that will both offset the related transaction gain or loss arising from that remeasurement and adjust earnings for that period's allocable portion of the initial spot-forward difference associated with the hedging instrument (cost to the purchaser or income to the seller of the hedging instrument) shall be reclassified each period from other comprehensive income to earnings if the assessment of effectiveness is based on total changes in the non-option-based instrument's cash flows.If an option contract is used as the hedging instrument in a cash flow hedge of the variability of the functional-currency-equivalent cash flows for a recognized foreign-currency-denominated asset or liability that is remeasured at spot exchange rates under paragraph [830-20-35-1](https://asc.understandingaccounting.org/asc/830/20/#830-20-35-1) to provide only one-sided offset against the hedged [foreign exchange risk](https://asc.understandingaccounting.org/glossary/f/#foreign-exchange-risk "The risk of changes in a hedged item's fair value or functional-currency-equivalent cash flows attributable to changes in the related foreign currency exchange rates."), an amount shall be reclassified each period to or from other comprehensive income with respect to the changes in the [underlying](https://asc.understandingaccounting.org/glossary/u/#underlying "A specified interest rate, security price, commodity price, foreign exchange rate, index of prices or rates, or other variable (including the occurrence or nonoccurrence of a specified event such as a scheduled payment under a contract). An underlying may be a price or rate of an asset or liability but is not the asset or liability itself. An underlying is a variable that, along with either a notional amount or a payment provision, determines the settlement of a derivative instrument.") that result in a change in the hedging option's intrinsic value. In addition, if the assessment of effectiveness is based on total changes in the option's cash flows (that is, the assessment will include the hedging instrument's entire change in [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.")—its entire gain or loss), an amount that adjusts earnings for the amortization of the cost of the option on a rational basis shall be reclassified each period from other comprehensive income to earnings. This guidance is limited to foreign currency hedging relationships because of their unique attributes and is an exception for foreign currency hedging relationships. 5. e [Subparagraph superseded by Accounting Standards Update No. 2017-12](https://asc.understandingaccounting.org/updates/asu-2017-12/). 6. f [Subparagraph superseded by Accounting Standards Update No. 2017-12](https://asc.understandingaccounting.org/updates/asu-2017-12/). ##### [815-30-35-4](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:6372a732bc3bf44fcb6b63b8ed3d3c7b40e39fb0409254563bae5a902c7f6824 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-12](https://asc.understandingaccounting.org/updates/asu-2017-12/). ##### [815-30-35-5](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:0fe04823665b43f8818d0f2d7947d26dee91cc8bab981bd21d84223f841ea47f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity has designated and documented that it will assess effectiveness and measure hedge results of a cash flow hedge of foreign currency risk on an after-tax basis as permitted by paragraph [815-20-25-3(b)(2)(vi)](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-3), the portion of the gain or loss on the hedging instrument that exceeded the loss or gain on the hedged item shall be included as an offset to the related tax effects in the period in which those tax effects are recognized. ##### [815-30-35-6](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:f915e5f9ebb8e06377b31865acf9b1bd73f2183a81bab451b6b5c6eff30394ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Remeasurement of the hedged foreign-currency-denominated assets and liabilities is based on the guidance in Topic 830, which requires remeasurement based on spot exchange rates, regardless of whether a cash flow hedging relationship exists. ##### [815-30-35-7](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:0b3d7cf6fd408ee4251752d4fc0a1c1192feaab05b89c45efe7b673f64bc3534 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples 1 through 4 (see paragraphs [815-30-55-1A through 55-19](https://asc.understandingaccounting.org/asc/815/30/#815-30-55-1A) ) illustrate assessing hedge effectiveness. Example 10 (see paragraph [815-30-55-63](https://asc.understandingaccounting.org/asc/815/30/#815-30-55-63)) illustrates the application of paragraph [815-30-35-3](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-3). ##### [815-30-35-8](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-8) Pending content: yes Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:c9b8bbf9a625d8d35ea5fabcf51529e5ba66c4da93279719eab5a11dfd01e6c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The remainder of this guidance addresses the following matters: 1. a Application to single cash flow hedge of a forecasted sale or purchase on credit for foreign exchange risk 2. b Assessing hedge effectiveness in certain cash flow hedges involving [interest rate risk](https://asc.understandingaccounting.org/glossary/i/#interest-rate-risk "For recognized variable-rate financial instruments and forecasted issuances or purchases of variable-rate financial instruments, interest rate risk is the risk of changes in the hedged item's cash flows attributable to changes in the contractually specified interest rate in the agreement. For recognized fixed-rate financial instruments, interest rate risk is the risk of changes in the hedged item's fair value attributable to changes in the designated benchmark interest rate. For forecasted issuances or purchases of fixed-rate financial instruments, interest rate risk is the risk of changes in the hedged item's cash flows attributable to changes in the designated benchmark interest rate.") when effectiveness is assessed on a quantitative basis 3. c Hedging relationship in which hedge effectiveness is based on an option's terminal value. 4. d Change in the designated hedged risk. Transition date:(P) December 16, 2026; (N) December 16, 2027Transition guidance: [815-20-65-7](https://asc.understandingaccounting.org/asc/815/20/#815-20-65-7)The remainder of this guidance addresses the following matters: 1. a Application to single cash flow hedge of a forecasted sale or purchase on credit for foreign exchange risk 2. b Assessing hedge effectiveness in certain cash flow hedges involving [interest rate risk](https://asc.understandingaccounting.org/glossary/i/#interest-rate-risk "For recognized variable-rate financial instruments and forecasted issuances or purchases of variable-rate financial instruments, interest rate risk is the risk of changes in the hedged item's cash flows attributable to changes in the contractually specified interest rate in the agreement. For recognized fixed-rate financial instruments, interest rate risk is the risk of changes in the hedged item's fair value attributable to changes in the designated benchmark interest rate. For forecasted issuances or purchases of fixed-rate financial instruments, interest rate risk is the risk of changes in the hedged item's cash flows attributable to changes in the designated benchmark interest rate.") when effectiveness is assessed on a quantitative basis 3. c Hedging relationship in which hedge effectiveness is based on an option's terminal value 4. d Change in the contractually specified interest rate for forecasted interest payments on choose-your-rate debt. ##### [815-30-35-9](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:4253a5f8a70f6ba48da05c79eb49b2cb81d14d3310046cb36e2f1b1e1391298b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For a single cash flow hedge that encompasses the variability of functional-currency-equivalent cash flows attributable to foreign exchange risk related to the settlement of a foreign-currency-denominated receivable or payable resulting from a forecasted sale or purchase on credit, the guidance in paragraph [815-30-35-3](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-3) is applied as follows: 1. a The gain or loss on the derivative instrument that is included in the assessment of hedge effectiveness is reported in other comprehensive income during the period before the forecasted purchase or sale. 2. b The functional currency interest rate implicit in the hedging relationship as a result of entering into the forward contract is used to determine the amount of cost or income to be ascribed to each period of the hedging relationship. The cash flow hedging model for recognized foreign-currency-denominated assets and liabilities requires use of the interest method at the inception of the hedging relationship to determine the amount of cost or income to be ascribed to each relevant period of the hedging relationship. However, for simplicity, in hedging relationships in which the hedged item is a short-term non-interest-bearing account receivable or account payable, the amount of cost or income to be ascribed each period can also be determined using a pro rata method based on the number of days or months of the hedging relationship. In addition, in a short-term single cash flow hedging relationship that encompasses the variability of functional-currency-equivalent cash flows attributable to foreign exchange risk related to the settlement of a foreign-currency-denominated receivable or payable resulting from a forecasted sale or purchase on credit, the amount of cost or income to be ascribed each period can also be determined using a pro rata method or a method that uses two foreign currency forward exchange rates. The first foreign currency forward exchange rate would be based on the maturity date of the forecasted purchase or sale transaction. The second foreign currency forward exchange rate would be based on the settlement date of the resulting account receivable or account payable. 3. c For forecasted sales on credit, the amount of cost or income ascribed to each forecasted period is reclassified from other comprehensive income to earnings on the date of the sale. For forecasted purchases on credit, the amount of cost or income ascribed to each forecasted period is reclassified from other comprehensive income to earnings in the same period or periods during which the asset acquired affects earnings. The reclassification from other comprehensive income to earnings of the amount of cost or income ascribed to each forecasted period is based on the guidance in paragraphs [815-30-35-38 through 35-41](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-38) . 4. d The income or cost ascribed to each period encompassed within the periods of the recognized foreign-currency-denominated receivable or payable is reclassified from other comprehensive income to earnings at the end of each reporting period. Example 18 (see paragraph [815-30-55-106](https://asc.understandingaccounting.org/asc/815/30/#815-30-55-106)) illustrates such a transaction. ##### [815-30-35-10](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:384ce33dc7e086437f1f281148cd110f1264a5a724033f00607c3a646068e855 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance addresses the following three methods of assessing effectiveness of certain cash flow hedges when hedge effectiveness is assessed on a quantitative basis in accordance with paragraphs [815-20-25-3(b)(2)(iv)(01)](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-3) and [815-20-35-2 through 35-2F](https://asc.understandingaccounting.org/asc/815/20/#815-20-35-2): 1. a Change-in-variable-cash-flows method 2. b Hypothetical-derivative method 3. c Change-in-fair-value method. ##### [815-30-35-11](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:a9c857c8b6c5e5466945438581feb6d81178e8d307de807ffc30321e233d4f70 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Those three methods relate to assessing the effectiveness of a cash flow hedge that involves any of the following: 1. a A receive-variable, pay-fixed interest rate swap designated as a hedge of the variable interest payments on an existing floating-rate liability 2. b A receive-fixed, pay-variable interest rate swap designated as a hedge of the variable interest receipts on an existing variable-rate asset 3. c Cash flow hedges of the variability of future interest payments on interest-bearing assets to be acquired or interest-bearing liabilities to be incurred (such as the rollover of an entity's short-term debt as described in Example 9 \[see paragraph [815-30-55-52](https://asc.understandingaccounting.org/asc/815/30/#815-30-55-52)\]). ##### [815-30-35-12](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:52fba610958851273f3bc4376488a21d379f0898c6dceae6b198f66b3746dce4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The hedging relationships covered by this guidance encompass either of the following: 1. a Hedges of interest rate risk (pursuant to paragraph [815-20-25-15(j)(2)](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-15)) that do not qualify for the shortcut method 2. b Hedges of the risk of overall changes in the hedged cash flows related to the asset or liability (pursuant to paragraph [815-20-25-15(j)(1)](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-15)). ##### [815-30-35-13](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:d3620664d3808ae99d4addde0afcfd6b2c6df75689ae5b46e1dd22ac6c4220bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If, at the inception of the hedge, the fair value of the interest rate swap designated as the hedging instrument is zero or is somewhat near zero, any of the three methods in paragraph [815-30-35-10](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-10) may be applied to assess hedge effectiveness. ##### [815-30-35-14](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:99069aa0567406f8d33bbcda01e039331e8b1aae4238bc16ea7e22fb741b6de4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In contrast, if, at the inception of the hedge, the fair value of the interest rate swap is not somewhat near zero, the change-in-variable-cash-flows method shall not be applied to assess hedge effectiveness because that method does not require entities to consider the interest element of the change in fair value of a hedging instrument that incorporates a financing element; instead, either the hypothetical-derivative method or the change-in-fair-value method shall be applied. Those latter two methods require entities to consider the interest element of the change in fair value of a hedging instrument that incorporates a financing element that is not somewhat near zero, such as if the interest rate swap has been structured to be significantly in the money at the inception of the hedging relationship. ##### [815-30-35-15](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:040aeea1cda1389fbee4f176c955f2b1f854cb2af3007877da1362cf34f389fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under all three methods, an entity shall consider the risk of default by counterparties that are obligors with respect to the hedging instrument (the interest rate swap) or hedged transaction, pursuant to the guidance in paragraphs [815-20-25-122](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-122) and [815-20-25-16(a)](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-16), respectively. An underlying assumption in this guidance is that the likelihood of the obligor not defaulting is assessed as being probable. ##### [815-30-35-15A](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-15A) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:dfcdba5fb6dad71a3a2ba0b8092dfe2504bedcb9da8f359e4152200e0f09cc28 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When assessing hedge effectiveness using any of the three methods specified in paragraph [815-30-35-10](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-10), in addition to the guidance specific to each method, an entity also shall apply the general guidance in paragraph [815-20-25-79](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-79) on prospective considerations and retrospective evaluations of hedge effectiveness. ##### [815-30-35-16](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:3884be336421ae947174307b772845f0ab1bced77a3e2fac846b3aeebd01b748 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall assess hedge effectiveness under the change-in-variable-cash-flows method by comparing the following items: 1. a The variable leg of the interest rate swap 2. b The hedged variable-rate cash flows on the asset or liability. ##### [815-30-35-17](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:f9301b570692d399bc11ec502b66702d9b389f03fe700efc1caaaada5433c5ce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As noted in paragraph [815-30-35-14](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-14), the change-in-variable-cash-flows method shall not be used in certain circumstances. ##### [815-30-35-18](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:7b2270fd48902a74d248ce8d1c1e55f4fb3c9c4d9df49101b28f1b86eb52e138 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The change-in-variable-cash-flows method is consistent with the cash flow hedge objective of effectively offsetting the changes in the hedged cash flows attributable to the hedged risk. The method is based on the premise that only the floating-rate component of the interest rate swap provides the cash flow hedge, and any change in the interest rate swap's fair value attributable to the fixed-rate leg is not relevant to the variability of the hedged interest payments (receipts) on the floating-rate liability (asset). ##### [815-30-35-19](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:5fe17649febfa0c867325a55657be15b1b4556e36915a6c9bfb7187bfe6c4add Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall assess hedge effectiveness under this method by comparing the following amounts: 1. a The present value of the cumulative change in the expected future cash flows on the variable leg of the interest rate swap 2. b The present value of the cumulative change in the expected future interest cash flows on the variable-rate asset or liability. ##### [815-30-35-20](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:5292f67b3bcaf65be20d78bcdfb5b5a60d539eee452bfa92013c78536fceedc7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the focus of a cash flow hedge is on whether the hedging relationship achieves offsetting changes in cash flows, if the variability of the hedged cash flows of the variable-rate asset or liability is based solely on changes in a variable-rate index, the present value of the cumulative changes in expected future cash flows on both the variable-rate leg of the interest rate swap and the variable-rate asset or liability shall be calculated using the discount rates applicable to determining the fair value of the interest rate swap. ##### [815-30-35-21](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:5ffd6809abbf39bb0737e028a7794bdcfbb0a488a01b2a4894fc95d3e33449d4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-12](https://asc.understandingaccounting.org/updates/asu-2017-12/). ##### [815-30-35-22](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:69f96154f86c6e3d09a043069114b5e00f26aed183238d817f116259ce105e2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The change-in-variable-cash-flows method will result in a perfectly effective hedge if all of the following conditions are met: 1. a The variable-rate leg of the interest rate swap and the hedged variable cash flows of the asset or liability are based on the same interest rate index (for example, three-month [London Interbank Offered Rate (LIBOR) swap rate](https://asc.understandingaccounting.org/glossary/l/#london-interbank-offered-rate-swap-rate "The fixed rate on a single-currency, constant-notional interest rate swap that has its variable-rate leg referenced to the London Interbank Offered Rate (LIBOR) with no additional spread over LIBOR on that variable-rate leg. That fixed rate is the derived rate that would result in the swap having a zero fair value at inception because the present value of fixed cash flows, based on that rate, equate to the present value of the variable cash flows. (P) December 16, 2018; (N) December 16, 2020815-20-65-4Glossary term superseded by Accounting Standards Update No. 2018-16.")). 2. b The interest rate reset dates applicable to the variable-rate leg of the interest rate swap and to the hedged variable cash flows of the asset or liability are the same. 3. c The hedging relationship does not contain any other basis differences (for example, if the variable leg of the interest rate swap contains a cap and the variable-rate asset or liability does not). 4. d The likelihood of the obligor not defaulting is assessed as being probable. ##### [815-30-35-23](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:2512b2efa768125a964705e3fc82e1ea7ccd4e23111a9060d14989f0eaecf96f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. However, a hedge would not be perfectly effective if any basis differences existed. For example, this would be expected to result from either of the following conditions, among others: 1. a A difference in the indexes used to determine cash flows on the variable leg of the interest rate swap (for example, the three-month U.S. Treasury rate) and the hedged variable cash flows of the asset or liability (for example, three-month LIBOR) 2. b A mismatch between the interest rate reset dates applicable to the variable leg of the interest rate swap and the hedged variable cash flows of the hedged asset or liability. ##### [815-30-35-24](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:87714afd2231e86e6e39741ab9414c407c86d52bfb467fd2f0d28fb5f6642ad8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 15 (see paragraph [815-30-55-91](https://asc.understandingaccounting.org/asc/815/30/#815-30-55-91)) illustrates the application of the change-in-variable-cash-flows method. ##### [815-30-35-25](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:1221fcc783e8771f628a5f7f86692f43910f252719082a3edb6ef70b7e8b9ac7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall assess hedge effectiveness under the hypothetical-derivative method by comparing the following amounts: 1. a The change in fair value of the actual interest rate swap designated as the hedging instrument 2. b The change in fair value of a hypothetical interest rate swap having terms that identically match the critical terms of the floating-rate asset or liability, including all of the following: 1. 1 The same [notional amount](https://asc.understandingaccounting.org/glossary/n/#notional-amount "A number of currency units, shares, bushels, pounds, or other units specified in a derivative instrument. Sometimes other names are used. For example, the notional amount is called a face amount in some contracts.") 2. 2 The same repricing dates 3. 3 The same index (that is, the index on which the hypothetical interest rate swap's variable rate is based matches the index on which the asset or liability's variable rate is based) 4. 4 Mirror image caps and floors 5. 5 A zero fair value at the inception of the hedging relationship. ##### [815-30-35-26](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:95908a2cad344c73af10876cdb8a1567a25846a8da8922fe021a827a6af1b67e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Essentially, the hypothetical derivative would need to satisfy all of the applicable conditions in paragraphs [815-20-25-104](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-104) and [815-20-25-106](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-106) necessary to qualify for use of the shortcut method except the criterion in paragraph [815-20-25-104(e)](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-104). Thus, the hypothetical interest rate swap would be expected to perfectly offset the hedged cash flows. Because the requirements of paragraph [815-20-25-104(e)](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-104) were developed with an emphasis on fair value hedging relationships, they do not fit the more general principle that the hypothetical derivative in a cash flow hedging relationship should be expected to perfectly offset the hedged cash flows. ##### [815-30-35-27](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:8b1a89c01497c936cce423880fdedba37334da9b40df124b7047a0874effcf95 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The change in the fair value of the perfect hypothetical interest rate swap can be regarded as a proxy for the present value of the cumulative change in expected future cash flows on the hedged transaction. ##### [815-30-35-28](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:dd981b9435977b3562129e6d3330d9ad83ec21f93b5e0b03f686834ac6b7422d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-12](https://asc.understandingaccounting.org/updates/asu-2017-12/). ##### [815-30-35-29](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:82ea5e80a2f269ea5e78853bdbd6373770fc72d11e495b4a327883798274174c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The determination of the fair value of both the perfect hypothetical interest rate swap and the actual interest rate swap shall use discount rates based on the relevant interest rate swap curves. ##### [815-30-35-30](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-30) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:9d5574ed3b619ff574a4a521c2ba4df90e2d4215e2d6b9fc6dce45984f81f449 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-12](https://asc.understandingaccounting.org/updates/asu-2017-12/). ##### [815-30-35-31](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-31) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:102fe0e766555907fadbef08517d658060897167fafb2fdf38d59e0a309095a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall assess hedge effectiveness under the change-in-fair-value method by comparing the following amounts: 1. a The present value of the cumulative change in expected variable future interest cash flows that are designated as the hedged transactions 2. b The cumulative change in the fair value of the interest rate swap designated as the hedging instrument. ##### [815-30-35-32](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-32) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:88d5c028df1a76608257da918ae9039eda9ab22f742777fe3cc957f2359886b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The discount rates applicable to determining the fair value of the interest rate swap designated as the hedging instrument shall also be applied to the computation of present values of the cumulative changes in the hedged cash flows. ##### [815-30-35-33](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-33) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:3079db86d0b8555bb5eebbe38cccb4ad9427f3927f3cb03d53b331e7e25ae2ad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity concludes under paragraphs [815-20-25-129 through 25-129A](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-129) that the hedging relationship may not be considered to be perfectly effective, the entity shall assess hedge effectiveness by comparing the following amounts: 1. a The change in fair value of the actual hedging instrument 2. b The change in fair value of a perfectly effective hypothetical hedging instrument. That hypothetical hedging instrument shall have terms that meet the four conditions listed in paragraphs [815-20-25-129 through 25-129A](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-129). ##### [815-30-35-34](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-34) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:6196a0e86c96685e0df85bd47cb49346b05143c5d58bfdae30fafec4821accbd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The change in fair value of the hypothetical hedging instrument can be regarded as a proxy for the present value of the cumulative change in expected future cash flows on the hedged transaction(s). ##### [815-30-35-35](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-35) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:b4d83f8cbe5486a7c6e4870796524c9f22e10d12f7d91fdbc25cfcd437a25b5b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-12](https://asc.understandingaccounting.org/updates/asu-2017-12/). ##### [815-30-35-36](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-36) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:21420291002b668a13de13fc856b43b1a5edbfe35e5a55d4b07c168c6f3496eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-12](https://asc.understandingaccounting.org/updates/asu-2017-12/). ##### [815-30-35-37](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:562814e1958c9b93d743bdda16b6a87b5cf2e44a4adce3cc6a9ef6bb15b81fd9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-12](https://asc.understandingaccounting.org/updates/asu-2017-12/). ##### [815-30-35-37A](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37A) Pending content: yes Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:055d560efc27257a6670915a373a81d9116419474d9e9db8fbdc0c0b2d9a5aa2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the designated hedged risk changes during the life of a hedging relationship, an entity may continue to apply hedge accounting if the hedging instrument is highly effective at achieving offsetting cash flows attributable to the revised hedged risk. The guidance in paragraph [815-20-55-56](https://asc.understandingaccounting.org/asc/815/20/#815-20-55-56) does not apply to changes in the hedged risk for a cash flow hedge of a forecasted transaction. Transition date:(P) December 16, 2026; (N) December 16, 2027Transition guidance: [815-20-65-7](https://asc.understandingaccounting.org/asc/815/20/#815-20-65-7)
Editor's Note: The heading that precedes paragraph 815-30-35-37A will be amended upon transition as shown below, and the content of the paragraph will be superseded.
• > Change in the Contractually Specified Interest Rate for Forecasted Interest Payments on Choose-Your-Rate Debt
[Paragraph superseded by Accounting Standards Update No. 2025-09.](https://asc.understandingaccounting.org/updates/asu-2025-09/) ##### [815-30-35-37B](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37B) Pending content: yes Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:d0d91bc63351a4ca227e5183ecfedf52b96d4672f0ff29bf389be485c4078fc6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2027Transition guidance: [815-20-65-7](https://asc.understandingaccounting.org/asc/815/20/#815-20-65-7)For a cash flow hedge of forecasted interest payments on choose-your-rate debt: 1. a With respect to the forecasted issuance of a choose-your-rate debt instrument, an entity may choose to apply the guidance in paragraphs [815-30-35-37C through 35-37H](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37C) on a hedge-by-hedge basis if both of the following conditions are satisfied: 1. 1 The forecasted interest payments designated as being hedged relate to the forecasted issuance of a choose-your-rate debt instrument that will be classified as a liability. 2. 2 The entity designates the hedged risk as the variability in cash flows attributable to changes in a contractually specified interest rate in accordance with paragraph [815-20-25-19A(b)](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-19A). 2. b With respect to an existing choose-your-rate debt instrument or replacement debt, an entity may choose to apply the guidance in paragraphs [815-30-35-37I through 35-37M](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37I) on a hedge-by-hedge basis if both of the following conditions are satisfied: 1. 1 The forecasted interest payments designated as being hedged have begun to accrue and relate to an existing choose-your-rate debt or replacement debt (see paragraph [815-30-35-37K](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37K) for additional guidance on replacement debt) instrument classified as a liability. 2. 2 The entity designates the hedged risk as the variability in cash flows attributable to changes in a contractually specified interest rate. The guidance in paragraphs [815-30-35-37C through 35-37M](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37C) shall not be applied by analogy, including to hedges designated under the first-payments-received technique (Example 4, Case A \[paragraphs [815-20-55-91 through 55-96A](https://asc.understandingaccounting.org/asc/815/20/#815-20-55-91) \] illustrates this technique) or to hedges of a choose-your-rate debt instrument or group of choose-your-rate debt instruments classified as assets. ##### [815-30-35-37C](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37C) Pending content: yes Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:c2021c58ee9b7d9e986f36fc6a9b1db6fd7747b172631d8307f3c3da2ab0a248 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2027Transition guidance: [815-20-65-7](https://asc.understandingaccounting.org/asc/815/20/#815-20-65-7)In a cash flow hedge of forecasted interest payments that meets the conditions described in paragraph [815-30-35-37B(a)](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37B), an entity shall designate the contractually specified interest rate (and interest rate tenor) as the entity’s best estimate of the interest rate index (and interest rate tenor) that it will initially select for the first interest period when the choose-your-rate debt instrument is issued. The currently designated best estimate of the interest rate index (and interest rate tenor) shall be considered the interest rate index (and interest rate tenor) upon which interest will accrue over the entire hedge period for purposes of assessing hedge effectiveness during the period before the debt is issued. The selection of an interest rate index (and interest rate tenor) in a subsequent period that alters the number and timing of the hedged forecasted interest payments within the hedge period shall not result in an automatic dedesignation of the hedging relationship. ##### [815-30-35-37D](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37D) Pending content: yes Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:00d1e3d371d02217e9964514a23fe3ad61dae9e40d22eb164c9ffb988aee8aea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2027Transition guidance: [815-20-65-7](https://asc.understandingaccounting.org/asc/815/20/#815-20-65-7)When designating the hedged risk in a cash flow hedge of forecasted interest payments that meets the conditions described in paragraph [815-30-35-37B(a)](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37B), an entity shall document the interest rate indexes (and interest rate tenors) that are included in choose-your-rate debt being offered in the market. If the entity determines that it is probable that it will issue choose-your-rate debt and initially select one of those documented interest rate indexes (and interest rate tenors) for the first interest period when the choose-your-rate debt instrument is issued, and if all of the other requirements of hedge accounting are met, hedge accounting may be applied. ##### [815-30-35-37E](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37E) Pending content: yes Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:27a2f73d989508319e7af157f4c15692612b9d7f748e8e77b72553794c530a35 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2027Transition guidance: [815-20-65-7](https://asc.understandingaccounting.org/asc/815/20/#815-20-65-7)If, during the forecast period, the entity’s best estimate of the interest rate index (and interest rate tenor) that it will initially select for the first interest period when the choose-your-rate debt instrument is issued changes to another rate that was documented at hedge inception, the entity shall apply the guidance in paragraphs [815-30-35-37F through 35-37G](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37F) to determine whether hedge accounting can continue. If the entity determines that it is probable that the interest rate index (and interest rate tenor) that it will initially select for the first interest period when the choose-your-rate debt instrument is issued will not be a rate that was documented at hedge inception or if the entity determines that it is probable that it will not issue choose-your-rate debt, the entity shall immediately reclassify the gain or loss on the hedging instrument reported in accumulated other comprehensive income into earnings in accordance with paragraph [815-30-40-5](https://asc.understandingaccounting.org/asc/815/30/#815-30-40-5). The entity also shall consider whether it has demonstrated a pattern of determining that hedged forecasted transactions are probable of not occurring and the propriety of using hedge accounting in the future for similar forecasted transactions in accordance with paragraph [815-30-40-5](https://asc.understandingaccounting.org/asc/815/30/#815-30-40-5). ##### [815-30-35-37F](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37F) Pending content: yes Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:b0c7903ba8e42d06045d767264d5a6422597b49d182c3bcd50ce4f4684ea611c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2027Transition guidance: [815-20-65-7](https://asc.understandingaccounting.org/asc/815/20/#815-20-65-7)If the best estimate of the interest rate index (and interest rate tenor) that the entity will select when the choose-your-rate debt instrument is issued changes to another rate that was documented in accordance with paragraph [815-30-35-37D](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37D) during the forecast period, the entity shall perform a final retrospective assessment of hedge effectiveness on the basis of changes in cash flows attributable to the previous best estimate of the interest rate. If the entity concludes on the basis of that retrospective assessment that the hedging relationship was not highly effective in having achieved offsetting cash flows, hedge accounting may not be applied during that period (that is, the overall change in the fair value of the hedging instrument for that period shall be recognized in earnings). However, the hedging relationship may continue if there is an expectation that the relationship will be highly effective in achieving offsetting cash flows in future periods and all other hedge accounting requirements are met. In that circumstance, the entity shall begin prospectively assessing hedge effectiveness on the basis of changes in cash flows attributable to the new best estimate of the interest rate in the period in which the best estimate of the interest rate changes. ##### [815-30-35-37G](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37G) Pending content: yes Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:25935912160af478a233cfef34345217b4a2188dc9be94affeb361d808fecac1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2027Transition guidance: [815-20-65-7](https://asc.understandingaccounting.org/asc/815/20/#815-20-65-7)In performing a prospective assessment with the new best estimate of the interest rate index (and interest rate tenor), the entity shall create the terms of the instrument used to estimate changes in the cash flows attributable to the new best estimate of the interest rate (under the originally designated method, for example, the hypothetical derivative method or another acceptable method in Subtopic 815-30) on the basis of market data as of the inception of the hedging relationship as if the new best estimate of the interest rate had been designated for the entire hedge period. If the best estimate of the interest rate does not change again, all subsequent retrospective and prospective assessments of hedge effectiveness shall be performed using the currently designated best estimate of the interest rate. With respect to the timing, an entity shall perform its assessments of effectiveness in a manner consistent with paragraph [815-20-25-3(b)(2)(iv)(02)](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-3). ##### [815-30-35-37H](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37H) Pending content: yes Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:b426d2815f13efbfae25b67b97e7512011191b0ac8e56e5168ddf3034e91ae59 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2027Transition guidance: [815-20-65-7](https://asc.understandingaccounting.org/asc/815/20/#815-20-65-7)After the choose-your-rate debt instrument is issued and the entity chooses the first interest rate index (and interest rate tenor) upon which interest will accrue, the entity shall no longer apply the guidance in paragraphs [815-30-35-37C through 35-37G](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37C) . Instead, if the entity continues to apply hedge accounting, it shall apply the guidance on existing choose-your-rate debt and related replacement debt (if applicable) in accordance with paragraphs [815-30-35-37I through 35-37M](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37I) and update its hedge documentation without dedesignating the hedging relationship. Example 28 (paragraph [815-30-55-171](https://asc.understandingaccounting.org/asc/815/30/#815-30-55-171)) illustrates how an entity should transition from the guidance on the forecasted issuance of choose-your-rate debt to the guidance on choose-your-rate debt and related replacement debt. ##### [815-30-35-37I](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37I) Pending content: yes Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:b94a296ba49b7c03b3fff8e6089b83ebe596dcf2cf289e99291f25851d5e965d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2027Transition guidance: [815-20-65-7](https://asc.understandingaccounting.org/asc/815/20/#815-20-65-7)In a cash flow hedge of forecasted interest payments that meets the conditions in paragraph [815-30-35-37B(b)](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37B), an entity shall designate the contractually specified interest rate (and interest rate tenor) as the then-selected interest rate index (and interest rate tenor). The currently designated interest rate index (and interest rate tenor) shall be considered the interest rate index (and interest rate tenor) upon which interest will accrue over the entire hedge period for purposes of assessing hedge effectiveness. The selection of an interest rate index (and interest rate tenor) in a subsequent period that alters the number and timing of the hedged forecasted interest payments within the hedge period shall not result in an automatic dedesignation of the hedging relationship as long as the selected interest rate index (and interest rate tenor) is one of the options included in the original existing choose-your-rate debt instrument as documented in accordance with paragraph [815-30-35-37J](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37J). ##### [815-30-35-37J](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37J) Pending content: yes Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:fddf218f2edeee062483dfed638ca8004b91de65f6c3b0749315afc191f24216 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2027Transition guidance: [815-20-65-7](https://asc.understandingaccounting.org/asc/815/20/#815-20-65-7)When designating the hedged risk in a cash flow hedge of forecasted interest payments that meets the conditions described in paragraph [815-30-35-37B(b)](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37B), an entity shall document the interest rate indexes (and interest rate tenors) that are included in the existing choose-your-rate debt instrument. If the entity determines that it is probable that the forecasted interest payments related to the existing choose-your-rate debt instrument or replacement debt will occur at one of the documented interest rate indexes (and interest rate tenors) during the hedge period and all of the other requirements of hedge accounting are met, hedge accounting may be applied. ##### [815-30-35-37K](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37K) Pending content: yes Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:ce8556eea47f9fc279da687b83f11d1b7fa8e9d68b227838fe294b11fb64041d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2027Transition guidance: [815-20-65-7](https://asc.understandingaccounting.org/asc/815/20/#815-20-65-7)An entity may designate the forecasted interest payments in a manner that includes debt that is expected to replace existing choose-your-rate debt. If the contractually specified interest rate at which interest is accruing on the replacement debt matches one of the interest rate index (and interest rate tenor) options included in the original choose-your-rate debt instrument that was outstanding when the first hedged interest payment began to accrue, the forecasted interest payments on the replacement debt shall be considered the hedged forecasted transactions without dedesignating the hedging relationship. If it becomes probable that the interest rate index (and interest rate tenor) at which interest will accrue on the replacement debt will not match one of the interest rate index (and interest rate tenor) options included in the original choose-your-rate debt instrument that was outstanding when the hedging relationship was initially designated, or that the replacement debt will be fixed-rate debt, the entity shall discontinue the application of hedge accounting and immediately reclassify the gain or loss on the hedging instrument recognized in accumulated other comprehensive income into earnings in accordance with paragraph [815-30-40-5](https://asc.understandingaccounting.org/asc/815/30/#815-30-40-5). The entity also shall consider whether it has demonstrated a pattern of determining that hedged forecasted transactions are probable of not occurring and the propriety of using hedge accounting in the future for similar forecasted transactions in accordance with paragraph [815-30-40-5](https://asc.understandingaccounting.org/asc/815/30/#815-30-40-5). ##### [815-30-35-37L](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37L) Pending content: yes Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:709231dc0702a4408f87b0c39b1b8894dd86cd6e531b161e60210541a85f3014 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2027Transition guidance: [815-20-65-7](https://asc.understandingaccounting.org/asc/815/20/#815-20-65-7)If the contractually specified interest rate in the hedging relationship is changed in accordance with paragraph [815-30-35-37I](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37I), the entity shall perform a final retrospective assessment of hedge effectiveness that is based on changes in cash flows attributable to the previously selected contractually specified interest rate for the last period in which interest was accruing at that interest rate. If the entity concludes on the basis of that retrospective assessment that the hedging relationship was not highly effective in having achieved offsetting cash flows, hedge accounting may not be applied during that period (that is, the change in the fair value of the hedging instrument for that period is recognized in earnings). However, the hedging relationship may continue if there is an expectation that the relationship will be highly effective in achieving offsetting cash flows in future periods and all other hedge accounting requirements are met. The entity shall begin prospectively assessing hedge effectiveness on the basis of changes in cash flows attributable to the newly selected contractually specified interest rate in the period in which interest begins accruing at that newly selected interest rate. ##### [815-30-35-37M](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-37M) Pending content: yes Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:4c234b3274af5dc51b7f1c9857f8836bf2f325ac07830efca3747db3d6a592de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2026; (N) December 16, 2027Transition guidance: [815-20-65-7](https://asc.understandingaccounting.org/asc/815/20/#815-20-65-7)In performing a prospective assessment with the newly selected contractually specified interest rate, the entity shall create the terms of the instrument used to estimate changes in the cash flows attributable to the newly selected contractually specified interest rate (under the originally designated method, for example, the hypothetical derivative method or another acceptable method in Subtopic 815-30) on the basis of market data as of the inception of the hedging relationship as if the newly selected contractually specified interest rate had been designated for the entire hedge period. All subsequent retrospective and prospective assessments of hedge effectiveness shall be performed using the currently designated interest rate. With respect to the timing, an entity shall perform its assessments of effectiveness in a manner consistent with paragraph [815-20-25-3(b)(2)(iv)(02)](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-3). #### Reclassifications from Accumulated Other Comprehensive Income into Earnings ##### [815-30-35-38](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-38) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:302bb7868603d11554512011ac75d2810980ad387bdf6e34627b63983ede9838 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts in accumulated other comprehensive income that are included in the assessment of effectiveness shall be reclassified into earnings in the same period or periods during which the hedged forecasted transaction affects earnings (for example, when a forecasted sale actually occurs) and shall be presented in the same income statement line item as the earnings effect of the hedged item in accordance with paragraph [815-20-45-1A](https://asc.understandingaccounting.org/asc/815/20/#815-20-45-1A). If an entity excludes a component of a hedging instrument from the assessment of effectiveness, an entity shall apply the guidance in paragraphs [815-20-25-83A through 25-83B](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-83A) . ##### [815-30-35-39](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-39) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:40ec2592bc841893a5bcda808a03582169fde4b82401b24b252cd3dfdbc326f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the hedged transaction results in the acquisition of an asset or the incurrence of a liability, the gains and losses in accumulated other comprehensive income that are included in the assessment of effectiveness shall be reclassified into earnings in the same period or periods during which the asset acquired or liability incurred affects earnings (such as in the periods that depreciation expense, interest expense, or cost of sales is recognized). ##### [815-30-35-40](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-40) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:3449b94bdc27483ae3b2acf92d3baf28912917a4ccae9c386bdfccd5cf9cbc45 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. However, if an entity expects at any time that continued reporting of a loss in accumulated other comprehensive income would lead to recognizing a net loss on the combination of the hedging instrument and the hedged transaction (and related asset acquired or liability incurred) in one or more future periods, a loss shall be reclassified immediately into earnings for the amount that is not expected to be recovered. ##### [815-30-35-41](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-41) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:468be6804e6716389ca117458089b7a31554826f24b6c3eea883a59d810de071 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, a loss shall be reported in earnings for a derivative instrument that is designated as hedging the forecasted purchase of inventory to the extent that the cost basis of the inventory plus the related amount reported in accumulated other comprehensive income exceeds the amount expected to be recovered through sales of that inventory. (Impairment guidance is provided in paragraphs [815-30-35-42 through 35-43](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-42) .) ##### [815-30-35-41A](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-41A) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:216dec451be7d9e241f9caa5592871f5ce4624917b28e5e231fff90dd4bf1918 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity may designate a hedging derivative with periodic cash settlements and a non-zero fair value at hedge inception as the hedging instrument in a qualifying cash flow hedging relationship. In this situation, amounts related to the initial fair value that are recorded in other comprehensive income during the hedging relationship shall be reclassified from accumulated other comprehensive income to earnings on a systematic and rational basis over the periods during which the hedged forecasted transactions affect earnings. Amounts reclassified to earnings shall be presented in the same income statement line item as the earnings effect of the hedged item. This guidance applies to both option-based and non-option-based derivatives designated as hedging instruments in a cash flow hedge. ##### [815-30-35-41B](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-41B) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:e7152f3246122afd3e71184d45577756cc30de9062c074f1112befec57c1a748 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This paragraph illustrates a method of reclassifying amounts from accumulated other comprehensive income to earnings when an option-based derivative is designated as a hedging instrument and the assessment of effectiveness is based on total changes in the derivative's cash flows. Those amounts include changes in fair value related to the derivative's initial intrinsic value in accordance with paragraph [815-30-35-41A](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-41A). For example, the fair value of a single cap at the inception of a hedging relationship of interest rate risk on variable-rate debt with quarterly interest payments over the next two years should be allocated to the respective caplets within the single cap on a fair value basis at the inception of the hedging relationship. The change in each respective allocated fair value amount should be reclassified out of accumulated other comprehensive income into earnings when each of the hedged [forecasted transactions](https://asc.understandingaccounting.org/glossary/f/#forecasted-transaction "A transaction that is expected to occur for which there is no firm commitment. Because no transaction or event has yet occurred and the transaction or event when it occurs will be at the prevailing market price, a forecasted transaction does not give an entity any present rights to future benefits or a present obligation for future sacrifices.") (the eight interest payments) affects earnings. Because the amount in accumulated other comprehensive income is a net amount composed of both derivative instrument gains and derivative instrument losses, the change in the respective allocated fair value amount for an individual caplet that is reclassified out of accumulated other comprehensive income into earnings may possibly be greater than the net amount in accumulated other comprehensive income. ##### [815-30-35-41C](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-41C) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:35cfb21d217ae113fc388cc025cdf3b88fedfdecc2933506feb7271732cedd11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance has no effect on the accounting for fair value hedging relationships. In addition, in determining the accounting for seemingly similar cash flow hedging relationships, it would be inappropriate to analogize to this guidance. ##### [815-30-35-42](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-42) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:eb942126889ad69706fd5f963cd9a2dbcb03fb838b58cbe261063f222f3e1e04 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Existing requirements in generally accepted accounting principles (GAAP) for assessing asset impairment or credit losses or recognizing an increased obligation apply to an asset or liability that gives rise to variable cash flows (such as a variable-rate [financial instrument](https://asc.understandingaccounting.org/glossary/f/#financial-instrument "Cash, evidence of an ownership interest in an entity, or a contract that both: Imposes on one entity a contractual obligation either: To deliver cash or another financial instrument to a second entity To exchange other financial instruments on potentially unfavorable terms with the second entity. Conveys to that second entity a contractual right either: To receive cash or another financial instrument from the first entity To exchange other financial instruments on potentially favorable terms with the first entity. The use of the term financial instrument in this definition is recursive (because the term financial instrument is included in it), though it is not circular. The definition requires a chain of contractual obligations that ends with the delivery of cash or an ownership interest in an entity. Any number of obligations to deliver financial instruments can be links in a chain that qualifies a particular contract as a financial instrument. Contractual rights and contractual obligations encompass both those that are conditioned on the occurrence of a specified event and those that are not. All contractual rights (contractual obligations) that are financial instruments meet the definition of asset (liability) set forth in FASB Concepts Statement No. 6, Elements of Financial Statements, although some may not be recognized as assets (liabilities) in financial statements—that is, they may be off-balance-sheet—because they fail to meet some other criterion for recognition. For some financial instruments, the right is held by or the obligation is due from (or the obligation is owed to or by) a group of entities rather than a single entity. (P) December 16, 2024; (N) December 16, 2025105-10-65-9Cash, evidence of an ownership interest in an entity, or a contract that both: Imposes on one entity a contractual obligation either: To deliver cash or another financial instrument to a second entity To exchange other financial instruments on potentially unfavorable terms with the second entity. Conveys to that second entity a contractual right either: To receive cash or another financial instrument from the first entity To exchange other financial instruments on potentially favorable terms with the first entity. The use of the term financial instrument in this definition is recursive (because the term financial instrument is included in it), though it is not circular. The definition requires a chain of contractual obligations that ends with the delivery of cash or an ownership interest in an entity. Any number of obligations to deliver financial instruments can be links in a chain that qualifies a particular contract as a financial instrument. Contractual rights and contractual obligations encompass both those that are conditioned on the occurrence of a specified event and those that are not. Some contractual rights (contractual obligations) that are financial instruments may not be recognized in financial statements—that is, they may be off-balance-sheet—because they fail to meet some other criterion for recognition. For some financial instruments, the right is held by or the obligation is due from (or the obligation is owed to or by) a group of entities rather than a single entity.")) for which the variable cash flows (the forecasted transactions) have been designated as being hedged and accounted for pursuant to paragraphs [815-30-35-3](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-3) and [815-30-35-38 through 35-41](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-38) . Those impairment or credit loss requirements shall be applied each period after hedge accounting has been applied for the period, pursuant to those paragraphs. The fair value or expected cash flows of a hedging instrument shall not be considered in applying those requirements. The gain or loss on the hedging instrument in accumulated other comprehensive income shall, however, be accounted for as discussed in paragraphs [815-30-35-38 through 35-41](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-38) . ##### [815-30-35-43](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-43) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:3387c51bd36e5d852a907e5fbc13ae80cb7e8137ef8ecb924fc4ef7381318049 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If, under existing requirements in GAAP, an asset impairment loss or writeoff due to credit losses is recognized on an asset or an additional obligation is recognized on a liability to which a hedged forecasted transaction relates, any offsetting or corresponding net gain related to that transaction in accumulated other comprehensive income shall be reclassified immediately into earnings. Similarly, if a recovery is recognized on the asset or liability to which the forecasted transaction relates, any offsetting net loss that has been accumulated in other comprehensive income shall be reclassified immediately into earnings. ##### [815-30-35-44](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-44) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:ee97282d99ecbf86c85884437bf9c6d2704ca20e584e52601b425a8f1781a0a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the reclassification to earnings of the amount in accumulated comprehensive income resulting from a cash flow hedge of debt is required under this Subsection when that debt is extinguished, the amount reclassified from accumulated comprehensive income to earnings shall be excluded from extinguishment gain or loss. ##### [815-30-35-45](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-45) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:24ef836ea86ac1b07577a399820e1df0d28a18b14c375d02645aa08ec383046c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the variable-rate interest on a specific borrowing is associated with an asset under construction and capitalized as a cost of that asset, the amounts in accumulated other comprehensive income related to a cash flow hedge of the variability of that interest shall be reclassified into earnings over the depreciable life of the constructed asset, because that depreciable life coincides with the amortization period for the capitalized interest cost on the debt. #### Hedging Relationship's Timing Involves Uncertainty within a Range ##### [815-30-35-46](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-46) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:37c9cf60d8e3bf6c087067f5f79d9f9c024c1c917bd7d6d42304efc8bebbdd7f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For forecasted transactions whose timing involves some uncertainty within a range, paragraph [815-20-25-16(c)](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-16) states that, as long as it remains probable that the forecasted transaction will occur by the end of the originally specified time period, cash flow hedge accounting for that hedging relationship shall continue. ##### [815-30-35-47](https://asc.understandingaccounting.org/asc/815/30/#815-30-35-47) Pending content: no Source downloaded (UTC): 2026-09-10T01:37:51.899Z to 2026-09-10T01:37:51.899Z Record version: sha256:8df7eeeb9b9b80be49cb740f2d168e27d0b6e03e133707e906159b7e38ff76ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/).