{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/815/35/#35-subsequent-measurement","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":"815-35","subtopic_title":"Net Investment Hedges","section":{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":"Overall","paragraphs":[{"citation":"815-35-35-1","para":"35-1","html":"
The gain or loss on a hedging derivative instrument (or the foreign currency transaction gain or loss on the nonderivative hedging instrument) that is designated as, and is effective as, an economic hedge of the net investment in a foreign operation shall be reported in the same manner as a translation adjustment (that is, reported in the cumulative translation adjustment section of other comprehensive income).
","snippet":"The gain or loss on a hedging derivative instrument (or the foreign currency transaction gain or loss on the nonderivative hedging instrument) that is designated as, and is effective as, an economic hedge of the net inve…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8e0b26cbc9fd9d12f0b31cb0e6a6d38596d1ba4e1baeb57f07b47631ed5fc96a","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-2","para":"35-2","html":"
The hedged net investment shall be accounted for consistent with Topic 830. The provisions of Subtopic 815-25 for recognizing the gain or loss on assets designated as being hedged in a fair value hedge do not apply to the hedge of a net investment in a foreign operation.
","snippet":"The hedged net investment shall be accounted for consistent with Topic 830. The provisions of Subtopic 815-25 for recognizing the gain or loss on assets designated as being hedged in a fair value hedge do not apply to th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7eb7317440b9462be82f4e2b6833ce217bb6eea6fa0c49ae2e8b54612f224a39","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-3","para":"35-3","html":"
If an entity has designated and documented that it will assess effectiveness and measure hedge results on an after-tax basis as permitted by paragraph 815-20-25-3(b)(2)(vi), 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.
","snippet":"If an entity has designated and documented that it will assess effectiveness and measure hedge results on an after-tax basis as permitted by paragraph 815-20-25-3(b)(2)(vi), the portion of the gain or loss on the hedging…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9fd669930e9f9c4c35fc0c085359b12a70b2da1b54da1c5a0fab32942d1df5e8","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b9fa4afea2d1701d5a5e2feb2b81f1c8e8be76bc2bc906939fea374f27b69309","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"block":null,"heading":"Assessing Hedge Effectiveness and Measuring Hedge Results","paragraphs":[{"citation":"815-35-35-4","para":"35-4","html":"
If a derivative instrument is used as the hedging instrument, an entity may assess the effectiveness of a net investment hedge using either a method based on changes in spot exchange rates (as specified in paragraphs
815-35-35-5 through 35-15
) or a method based on changes in forward exchange rates (as specified in paragraphs
815-35-35-17 through 35-26
). This guidance can also be applied to purchased options used as hedging instruments in a net investment hedge. However, an entity shall consistently use the same method for all its net investment hedges in which the hedging instrument is a derivative instrument; use of the spot method for some net investment hedges and the forward method for other net investment hedges is not permitted. An entity may change the method that it chooses to assess the effectiveness of its net investment hedges in accordance with paragraphs 815-20-55-55 through 55-56A.
","snippet":"If a derivative instrument is used as the hedging instrument, an entity may assess the effectiveness of a net investment hedge using either a method based on changes in spot exchange rates (as specified in paragraphs 815…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:94552baa3db82754316f9029b2243e4ecdab70aa11cabe682bdd5740d1275ac9","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-4A","para":"35-4A","html":"
Hedge effectiveness shall be assessed on a quantitative basis at hedge inception in accordance with paragraph 815-20-25-3(b)(2)(iv)(01) unless one of the exceptions in that paragraph applies. Subsequent assessments of hedge effectiveness may be performed either on a quantitative basis or on a qualitative basis in accordance with paragraphs 815-20-35-2 through 35-2F.
","snippet":"Hedge effectiveness shall be assessed on a quantitative basis at hedge inception in accordance with paragraph 815-20-25-3(b)(2)(iv)(01) unless one of the exceptions in that paragraph applies. Subsequent assessments of he…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9c5f984986266bfbb37ee0c2ccd05fd14baf6f4d32c85d390840ab04bb7975f9","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-5","para":"35-5","html":"
The change in the fair value of the derivative instrument attributable to changes in the difference between the forward rate and spot rate would be excluded from the assessment of hedge effectiveness if all of the following conditions are met:
  1. a
    The notional amount of the derivative instrument designated as a hedge of a net investment in a foreign operation matches (that is, equals) the portion of the net investment designated as being hedged.
  2. b
    The derivative instrument's underlying exchange rate is the exchange rate between the functional currency of the hedged net investment and the investor's functional currency.
  3. c
    When the hedging derivative instrument is a cross-currency interest rate swap, it is eligible for designation in a net investment hedge in accordance with paragraph 815-20-25-67.
In that circumstance, the hedging relationship would be considered perfectly effective, and no quantitative effectiveness assessment is required at hedge inception. (See paragraph 815-20-25-3(b)(2)(iv)(01).)
","snippet":"The change in the fair value of the derivative instrument attributable to changes in the difference between the forward rate and spot rate would be excluded from the assessment of hedge effectiveness if all of the follow…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0c821308276e4f805bf933fe3b6e2124a21ea86aaba501d43ab96c2e155d48bb","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-5A","para":"35-5A","html":"
An entity shall recognize in earnings the initial value of the component excluded from the assessment of effectiveness using a systematic and rational method over the life of the hedging instrument. Any difference between the change in fair value of the excluded component and amounts recognized in earnings under that systematic and rational method shall be recognized in the same manner as a translation adjustment (that is, reported in the cumulative translation adjustment section of other comprehensive income).
","snippet":"An entity shall recognize in earnings the initial value of the component excluded from the assessment of effectiveness using a systematic and rational method over the life of the hedging instrument. Any difference betwee…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:05fa68faaa5d6112d1ad78718859c68e0b537cf1c5c8acd7597bb637f2494dd8","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-5B","para":"35-5B","html":"
An entity alternatively may elect to record changes in the fair value of the excluded component currently in earnings. This election shall be applied consistently to similar hedges in accordance with paragraph 815-20-25-81.
","snippet":"An entity alternatively may elect to record changes in the fair value of the excluded component currently in earnings. This election shall be applied consistently to similar hedges in accordance with paragraph 815-20-25-…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e6a57927a8133a391720bf2993f79d64a5a5dcbe24e9872c530b54488bd2b62a","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-6","para":"35-6","html":"
The interest accrual (periodic cash settlement) components of qualifying receive-variable-rate, pay-variable-rate and receive-fixed rate, pay-fixed-rate cross-currency interest rate swaps shall also be reported directly in earnings.
","snippet":"The interest accrual (periodic cash settlement) components of qualifying receive-variable-rate, pay-variable-rate and receive-fixed rate, pay-fixed-rate cross-currency interest rate swaps shall also be reported directly …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:22b936e3ba5df430ffb261491e8c36fdf5c85f12f759bef8b8659291373eff7b","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-7","para":"35-7","html":"
The change in fair value of the derivative instrument attributable to changes in the spot rate shall be reported in the same manner as a translation adjustment (that is, reported in the cumulative translation adjustment section of other comprehensive income).
","snippet":"The change in fair value of the derivative instrument attributable to changes in the spot rate shall be reported in the same manner as a translation adjustment (that is, reported in the cumulative translation adjustment …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c8a1ce49060dd242b0ab7f4a56d2c941c570488821ced2a7500a77b3e17172a4","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-8","para":"35-8","html":"
The spot-to-spot changes in value reported in the cumulative translation adjustment section of other comprehensive income shall not be discounted.
","snippet":"The spot-to-spot changes in value reported in the cumulative translation adjustment section of other comprehensive income shall not be discounted.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8a62b25bc831be74ffeea7d75ba9cb923feb762fe0441d2b0da9b070f2f08012","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-9","para":"35-9","html":"
The hedging relationship would not be considered perfectly effective, and the guidance in paragraph 815-35-35-10 shall be applied if any of the following conditions exist:
  1. a
    The notional amount of the derivative instrument does not match the portion of the net investment designated as being hedged.
  2. b
    The derivative instrument's underlying exchange rate is not the exchange rate between the functional currency of the hedged net investment and the investor's functional currency.
  3. c
    When the hedging derivative instrument is a cross-currency interest rate swap eligible for designation in a net investment hedge in accordance with paragraph 815-20-25-67, both legs are not based on comparable interest rate curves (for example, pay foreign currency based on the three-month London Interbank Offered Rate [LIBOR], receive functional currency based on three-month commercial paper rates).
","snippet":"The hedging relationship would not be considered perfectly effective, and the guidance in paragraph 815-35-35-10 shall be applied if any of the following conditions exist:\n(a) The notional amount of the derivative instru…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1db9fafa96c3f3544b79065c38e27c80b1f90b10f9175631e9a639e573dcfea1","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-10","para":"35-10","html":"
If any of the conditions in paragraph 815-35-35-9 exist, the change in fair value of the hypothetical derivative instrument that does not incorporate those differences shall be compared with the change in fair value of the actual derivative instrument in assessing hedge effectiveness.
","snippet":"If any of the conditions in paragraph 815-35-35-9 exist, the change in fair value of the hypothetical derivative instrument that does not incorporate those differences shall be compared with the change in fair value of t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8cb8b12019a6a2407c1235cf3057873b9c758f54fec8ae7502972ac89b8597a8","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-11","para":"35-11","html":"
The hypothetical derivative instrument used to assess hedge effectiveness also shall have a maturity and repricing and payment frequencies for any interim payments that match the maturity and repricing and payment frequencies for any interim payments of the actual derivative instrument designated as the hedging instrument in the net investment hedge.
","snippet":"The hypothetical derivative instrument used to assess hedge effectiveness also shall have a maturity and repricing and payment frequencies for any interim payments that match the maturity and repricing and payment freque…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d3b19b3036ea78cec6e1f345eff5bd55f204ddf214ecea20ed6b28d0e49db251","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-12","para":"35-12","html":"
The translation gain or loss determined under Subtopic 830-30 by reference to the spot exchange rate between the transaction currency of the debt and the functional currency of the investor (after tax effects, if appropriate) shall be reported in the same manner as the translation adjustment associated with the hedged net investment (that is, reported in the cumulative translation adjustment section of other comprehensive income) if both of the following conditions are met:
  1. a
    The notional amount of the nonderivative instrument matches the portion of the net investment designated as being hedged.
  2. b
    The nonderivative instrument is denominated in the functional currency of the hedged net investment.
In that circumstance, the hedging relationship would be considered perfectly effective, and no prospective quantitative effectiveness assessment is required at hedge inception (see paragraph 815-20-25-3(b)(2)(iv)(01)).
","snippet":"The translation gain or loss determined under Subtopic 830-30 by reference to the spot exchange rate between the transaction currency of the debt and the functional currency of the investor (after tax effects, if appropr…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:976513d544b87f6af7938cfa3336e71e585642108ecfffbea612d650867952aa","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-13","para":"35-13","html":"
The hedging relationship would not be perfectly effective if either of the following conditions is met:
  1. a
    The notional amount of the nonderivative instrument does not match the portion of the net investment designated as being hedged.
  2. b
    The nonderivative instrument is denominated in a currency other than the functional currency of the hedged net investment.
","snippet":"The hedging relationship would not be perfectly effective if either of the following conditions is met:\n(a) The notional amount of the nonderivative instrument does not match the portion of the net investment designated …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e3a7d704f63ba774243c6c67cf83814eea47ebcf7c0aeb88aa37fbc0d42a94ad","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-14","para":"35-14","html":"
Effectiveness shall be assessed by comparing the following two values:
  1. a
    The foreign currency transaction gain or loss based on the spot rate change (after tax effects, if appropriate) of that nonderivative instrument
  2. b
    The transaction gain or loss based on the spot rate change (after tax effects, if appropriate) that would result from the appropriate hypothetical nonderivative instrument that does not incorporate those differences. The hypothetical nonderivative instrument shall also have a maturity that matches the maturity of the actual nonderivative instrument designated as the net investment hedge.
","snippet":"Effectiveness shall be assessed by comparing the following two values:\n(a) The foreign currency transaction gain or loss based on the spot rate change (after tax effects, if appropriate) of that nonderivative instrument\n…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:72c930f223a3dbb2dd249039c74c793e04ccf40593b79c4dd1d65bb057305077","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-15","para":"35-15","html":"
Paragraph superseded by Accounting Standards Update No. 2017-12.
","snippet":"Paragraph superseded by Accounting Standards Update No. 2017-12.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:621cca1443e1d96a24a8670ca81e4e355e2893974904558428eeffad2de908d0","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-16","para":"35-16","html":"
Paragraph superseded by Accounting Standards Update No. 2017-12.
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Under a method based on changes in forward exchange rates, an entity shall report all changes in fair value of the derivative instrument in the same manner as a translation adjustment (that is, reported in the cumulative translation adjustment section of other comprehensive income), including the following amounts:
  1. a
    The time value component of purchased options
  2. b
    The interest accrual/periodic cash settlement components of qualifying receive-variable-rate, pay-variable-rate and receive-fixed-rate, pay-fixed-rate cross-currency interest rate swaps.
","snippet":"Under a method based on changes in forward exchange rates, an entity shall report all changes in fair value of the derivative instrument in the same manner as a translation adjustment (that is, reported in the cumulative…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d4cddfa559f6b9d2bd70404e606308a72b1b41f31468b00b30bac97358d2068e","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-17A","para":"35-17A","html":"
If the notional amount of the derivative instrument designated as a hedge of a net investment in a foreign operation matches (that is, equals) the portion of the net investment designated as being hedged and the derivative instrument's underlying relates solely to the foreign exchange rate between the functional currency of the hedged net investment and the investor's functional currency, the hedging relationship would be considered perfectly effective, and no quantitative effectiveness assessment is required at hedge inception (see paragraph 815-20-25-3(b)(2)(iv)(01)).
","snippet":"If the notional amount of the derivative instrument designated as a hedge of a net investment in a foreign operation matches (that is, equals) the portion of the net investment designated as being hedged and the derivati…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a4b7b7efe0810a5adfe89e9e54eaaa41c1c4329a15ff494c9058b5eea6715db9","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-18","para":"35-18","html":"
However, the hedging relationship would not be considered perfectly effective if any of the following conditions exist:
  1. a
    The notional amount of the derivative instrument does not match the portion of the net investment designated as being hedged.
  2. b
    The derivative instrument's underlying exchange rate is not the exchange rate between the functional currency of the hedged net investment and the investor's functional currency.
  3. c
    When the hedging derivative instrument is a cross-currency interest rate swap eligible for designation in a net investment hedge in accordance with paragraph 815-20-25-67, both legs are not based on comparable interest rate curves (for example, pay foreign currency based on three-month LIBOR, receive functional currency based on three-month commercial paper rates).
","snippet":"However, the hedging relationship would not be considered perfectly effective if any of the following conditions exist:\n(a) The notional amount of the derivative instrument does not match the portion of the net investmen…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dae3e045a98bea6e7b747a5dc7080aa4abe8675e5b97ffffd5b13817d74b13d9","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-19","para":"35-19","html":"
The assessment of hedge effectiveness due to such differences between the hedging derivative instrument and the hedged net investment considers the following:
  1. a
    Different notional amounts. If the notional amount of the derivative instrument designated as a hedge of the net investment does not match the portion of the net investment designated as being hedged, hedge effectiveness shall be assessed by comparing the following two values:
    1. 1
      The change in fair value of the actual derivative instrument designated as the hedging instrument
    2. 2
      The change in fair value of a hypothetical derivative instrument that has a notional amount that matches the portion of the net investment being hedged and a maturity that matches the maturity of the actual derivative instrument designated as the net investment hedge. See paragraph 815-35-35-26 for situations in which the hedge of a net investment in a foreign operation is hedging foreign currency risk on an after-tax basis, as permitted by paragraph 815-20-25-3(b)(2)(vi).
  2. b
    Different currencies. If the derivative instrument designated as the hedging instrument has an underlying foreign exchange rate that is not the exchange rate between the functional currency of the hedged net investment and the investor's functional currency (a tandem currency hedge), hedge effectiveness shall be assessed by comparing the following two values:
    1. 1
      The change in fair value of the actual cross-currency hedging instrument
    2. 2
      The change in fair value of a hypothetical derivative instrument that has as its underlying the foreign exchange rate between the functional currency of the hedged net investment and the investor's functional currency and a maturity and repricing and payment frequencies for any interim payments that match the maturity and repricing and payment frequencies for any interim payments of the actual derivative instrument designated as the net investment hedge.
  3. c
    Multiple underlyings. In accordance with paragraph 815-20-25-67(a), the only derivative instruments with multiple underlyings permitted to be designated as a hedge of a net investment are receive-variable-rate, pay-variable-rate cross-currency interest rate swaps that meet certain criteria. Paragraph 815-20-25-67(b) also permits receive-fixed-rate, pay-fixed-rate cross-currency interest rate swaps to be designated as a hedge of a net investment.
","snippet":"The assessment of hedge effectiveness due to such differences between the hedging derivative instrument and the hedged net investment considers the following:\n(a) Different notional amounts. If the notional amount of the…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c11f4201621ea8696af0c6ca480b034e298b9f30b6bc45d2e24ba4cdea4971d8","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-20","para":"35-20","html":"
If a receive-variable-rate, pay-variable-rate cross-currency interest rate swap is designated as the hedging instrument in a net investment hedge, hedge effectiveness shall be assessed by comparing the following two values:
  1. a
    The change in fair value of the actual cross-currency interest rate swap designated as the hedging instrument
  2. b
    The change in fair value of a hypothetical receive-variable-rate, pay-variable-rate cross-currency interest rate swap in which the interest rates are based on the same currencies contained in the hypothetical swap and both legs of the hypothetical swap have the same repricing intervals and dates. The hypothetical derivative instrument also shall have a maturity that matches the maturity of the actual cross-currency interest rate swap designated as the net investment hedge.
","snippet":"If a receive-variable-rate, pay-variable-rate cross-currency interest rate swap is designated as the hedging instrument in a net investment hedge, hedge effectiveness shall be assessed by comparing the following two valu…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2e82ccf7d2b71a51195e71c7ea1e968b49b09bb7898806f1a93cbc2c40d48b13","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-21","para":"35-21","html":"
If a receive-fixed-rate, pay-fixed-rate cross-currency interest rate swap is designated as the hedging instrument in a net investment hedge, hedge effectiveness shall be assessed by comparing the following two values:
  1. a
    The change in fair value of the actual cross-currency interest rate swap designated as the hedging instrument
  2. b
    The change in fair value of a hypothetical receive-fixed-rate, pay-fixed-rate cross-currency interest rate swap in which the interest rates are based on the same currencies contained in the hypothetical swap. The hypothetical derivative instrument shall also have a maturity that matches the maturity of the actual cross-currency interest rate swap designated as the net investment hedge.
","snippet":"If a receive-fixed-rate, pay-fixed-rate cross-currency interest rate swap is designated as the hedging instrument in a net investment hedge, hedge effectiveness shall be assessed by comparing the following two values:\n(a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e229504fbeb16155167c4768025b2ed12ac2964e014ba8dd1b1f9bfbac98cc4c","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-22","para":"35-22","html":"
Paragraph superseded by Accounting Standards Update No. 2017-12.
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Paragraph superseded by Accounting Standards Update No. 2017-12.
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Paragraph superseded by Accounting Standards Update No. 2017-12.
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Paragraph superseded by Accounting Standards Update No. 2017-12.
","snippet":"Paragraph superseded by Accounting Standards Update No. 2017-12.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:baab60bf2184e0f03d691c99e9af986e80ac79e05f0043bfea7c52996d2dfb84","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"citation":"815-35-35-26","para":"35-26","html":"
Paragraph 815-20-25-3(b)(2)(vi) permits hedging foreign currency risk on an after-tax basis, provided that the documentation of the hedge at its inception indicated that the assessment of effectiveness and measurement of hedge results will be on an after-tax basis (rather than on a pretax basis). If an entity has elected to hedge foreign currency risk on an after-tax basis, it shall adjust the notional amount of its derivative instrument appropriately to reflect the effect of tax rates. In that case, the hypothetical derivative instrument used to assess effectiveness shall have a notional amount that has been appropriately adjusted (pursuant to the documentation at inception) to reflect the effect of the after-tax approach.
","snippet":"Paragraph 815-20-25-3(b)(2)(vi) permits hedging foreign currency risk on an after-tax basis, provided that the documentation of the hedge at its inception indicated that the assessment of effectiveness and measurement of…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0005b8c0af95f42cabcc854cd57727b40f3d5f5d446de6005b5f4fff041fab76","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b172a8ccc05e2999602c6c050b32a94e1cdf3fe72d637c4a5a9a717d62932aa5","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},{"block":null,"heading":"Redesignation","paragraphs":[{"citation":"815-35-35-27","para":"35-27","html":"
If an entity documents that the effectiveness of its hedge of the net investment in a foreign operation will be assessed based on the beginning balance of its net investment and the entity's net investment changes during the year, the entity shall consider the need to redesignate the hedging relationship (to indicate what the hedging instrument is and what numerical portion of the current net investment is the hedged portion) whenever financial statements or earnings are reported, and at least every three months. An entity is not required to redesignate the hedging relationship more frequently even when a significant transaction (for example, a dividend) occurs during the interim period. Example 1 (see paragraph 815-35-55-1) illustrates the application of this guidance.
","snippet":"If an entity documents that the effectiveness of its hedge of the net investment in a foreign operation will be assessed based on the beginning balance of its net investment and the entity's net investment changes during…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:513922e890d944c3c518fb6e11da925fb090b3b23637987004b6deffac0c22a6","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:67a99d84ebbf9e54c3f51651724b2325f27583c0aed35c3e90628a330d90c306","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e9839e6235389b598e4669c0ad20b258896261903b696064126319e1dea8cea8","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e9839e6235389b598e4669c0ad20b258896261903b696064126319e1dea8cea8","downloaded_from":"2026-09-10T01:38:32.426Z","last_downloaded_at":"2026-09-10T01:38:32.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480649","source_sha256":"c593d7861a807a0f820bc967108d9e9f7e441bc25e81d6bd43471050a7abefa6"}}