{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/815/45/#30-initial-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":"815-45","subtopic_title":"Weather Derivatives","section":{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":null,"heading":"Nontrading Activities","paragraphs":[{"citation":"815-45-30-1","para":"30-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_C3042D31-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A purchased non-exchange-traded option-based <a href=\"/glossary/w/#weather-derivative\" class=\"term\" title=\"A forward-based or option-based contract for which settlement is based on a climatic or geological variable. One example of such a variable is the occurrence or nonoccurrence of a specified amount of snow at a specified location within a specified period of time.\"><span>weather derivative</span></a> recognized as an asset under paragraph <a href=\"/asc/815/45/#815-45-25-2\" class=\"xref\">815-45-25-2</a> shall be measured initially at the amount of the premium paid. </span></span></div></div>","snippet":"A purchased non-exchange-traded option-based weather derivative recognized as an asset under paragraph 815-45-25-2 shall be measured initially at the amount of the premium paid.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:69084d72080d9dcf3c8585f2e5b25e52ff230f989101fbc31e4b901e62f0b877","downloaded_from":"2026-09-10T01:39:41.115Z","last_downloaded_at":"2026-09-10T01:39:41.115Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480935","source_sha256":"dc24dd7306ac4caad16f9bc19a5338664eb96884f079099cf72d07ae98eeae61"}},{"citation":"815-45-30-2","para":"30-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_C3042EE4-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A sold or written non-exchange-traded option-based weather derivative recognized as a liability under paragraph <a href=\"/asc/815/45/#815-45-25-3\" class=\"xref\">815-45-25-3</a> shall </span></span><span class=\"sfragment\" id=\"sfr_C3043054-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">be measured initially at the amount of the premium received. </span></span></div></div>","snippet":"A sold or written non-exchange-traded option-based weather derivative recognized as a liability under paragraph 815-45-25-3 shall be measured initially at the amount of the premium received.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:27ae3bd2a01cf9fb35bd334d1ce83a50760e041ba69a5fcec75d144c1c969f55","downloaded_from":"2026-09-10T01:39:41.115Z","last_downloaded_at":"2026-09-10T01:39:41.115Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480935","source_sha256":"dc24dd7306ac4caad16f9bc19a5338664eb96884f079099cf72d07ae98eeae61"}},{"citation":"815-45-30-3","para":"30-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_C304315C-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The intrinsic value method requires that the reporting entity allocate the cumulative strike amount to individual periods within the contract term. </span></span><span class=\"sfragment\" id=\"sfr_C3043254-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">That allocation shall reflect reasonable expectations at the beginning of the contract term of normal or expected experience under the contract. </span></span><span class=\"sfragment\" id=\"sfr_C304333F-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">That allocation shall be based on data from external statistical sources, such as the National Weather Service. </span></span><span class=\"sfragment\" id=\"sfr_C304347A-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">See Example 1 (paragraph <a href=\"/asc/815/45/#815-45-55-7\" class=\"xref\">815-45-55-7</a>) for an illustration of the accounting for example contracts. </span></span></div></div>","snippet":"The intrinsic value method requires that the reporting entity allocate the cumulative strike amount to individual periods within the contract term. That allocation shall reflect reasonable expectations at the beginning o…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9f95d3740ba404f61ee02aa3ea20a3594414f986d67a3409a9c0dc4e3ab71cca","downloaded_from":"2026-09-10T01:39:41.115Z","last_downloaded_at":"2026-09-10T01:39:41.115Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480935","source_sha256":"dc24dd7306ac4caad16f9bc19a5338664eb96884f079099cf72d07ae98eeae61"}},{"citation":"815-45-30-3A","para":"30-3A","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_C30435C5-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A purchased or written weather derivative may contain an embedded premium or discount if the contract terms are not consistent with current market terms (for example, the cumulative strike amount referenced in the contract is not consistent with historical weather data, adjusted for expected experience). </span></span><span class=\"sfragment\" id=\"sfr_C3043707-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">In those circumstances, the premium or discount shall be quantified, removed from the calculated benchmark strike, and accounted for as discussed in the preceding paragraphs. </span></span></div></div>","snippet":"A purchased or written weather derivative may contain an embedded premium or discount if the contract terms are not consistent with current market terms (for example, the cumulative strike amount referenced in the contra…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4ab8b24ca43dee6a97ea00b83b9bf992dfe73daae751843887d33c344eee5369","downloaded_from":"2026-09-10T01:39:41.115Z","last_downloaded_at":"2026-09-10T01:39:41.115Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480935","source_sha256":"dc24dd7306ac4caad16f9bc19a5338664eb96884f079099cf72d07ae98eeae61"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:30b6109c156f8b3d4b11700d67d43c0d74f5ab56be209d083141e9ecf90c6609","downloaded_from":"2026-09-10T01:39:41.115Z","last_downloaded_at":"2026-09-10T01:39:41.115Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480935","source_sha256":"dc24dd7306ac4caad16f9bc19a5338664eb96884f079099cf72d07ae98eeae61"}},{"block":null,"heading":"Trading Activities","paragraphs":[{"citation":"815-45-30-4","para":"30-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_C304384C-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">All weather derivative contracts entered into under <a href=\"/glossary/t/#trading\" class=\"term\" title=\"An activity involving securities sold in the near term and held for only a short period of time. The term trading contemplates a holding period generally measured in hours and days rather than months or years. See paragraph 948-310-40-1 for clarification of the term trading for a mortgage banking entity.\"><span>trading</span></a> or speculative activities shall be measured initially </span></span><span class=\"sfragment\" id=\"sfr_C3043965-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">at their <a href=\"/glossary/f/#fair-value\" class=\"term\" title=\"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.\"><span>fair value</span></a>. </span></span></div></div>","snippet":"All weather derivative contracts entered into under trading or speculative activities shall be measured initially at their fair value.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:313f7e12748c67d6ec154cc8dfadf9530c3a7ddacc979c8d9d851611571c386d","downloaded_from":"2026-09-10T01:39:41.115Z","last_downloaded_at":"2026-09-10T01:39:41.115Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480935","source_sha256":"dc24dd7306ac4caad16f9bc19a5338664eb96884f079099cf72d07ae98eeae61"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7e0389db35d472e41d80a73d89074ff64a3ba625e506558f0f20b30ac86b6305","downloaded_from":"2026-09-10T01:39:41.115Z","last_downloaded_at":"2026-09-10T01:39:41.115Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480935","source_sha256":"dc24dd7306ac4caad16f9bc19a5338664eb96884f079099cf72d07ae98eeae61"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1db2d5a21603cd9c3d7eea0acc2a4b3e28d27a69f724b639837b02157883109e","downloaded_from":"2026-09-10T01:39:41.115Z","last_downloaded_at":"2026-09-10T01:39:41.115Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480935","source_sha256":"dc24dd7306ac4caad16f9bc19a5338664eb96884f079099cf72d07ae98eeae61"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1db2d5a21603cd9c3d7eea0acc2a4b3e28d27a69f724b639837b02157883109e","downloaded_from":"2026-09-10T01:39:41.115Z","last_downloaded_at":"2026-09-10T01:39:41.115Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480935","source_sha256":"dc24dd7306ac4caad16f9bc19a5338664eb96884f079099cf72d07ae98eeae61"}}