# ASC 815-45-35: Derivatives and Hedging — Weather Derivatives — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/815/45/#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): 2026-09-10T01:39:43.163Z to 2026-09-10T01:39:43.163Z Record version: sha256:22abb146f3a3b52e570635fcdf05aea0aa79873192a9db93d480591e3f33a052 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 815-45-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/815/45/#35-subsequent-measurement) SEC content: no #### Nontrading Activities ##### [815-45-35-1](https://asc.understandingaccounting.org/asc/815/45/#815-45-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:39:43.163Z to 2026-09-10T01:39:43.163Z Record version: sha256:164b5b985c36f1041df7cae65102e326f85a6631cca127a320b0f6d60b532a42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that enters into a non-exchange-traded forward-based [weather derivative](https://asc.understandingaccounting.org/glossary/w/#weather-derivative "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.") in connection with nontrading activities shall account for the contract by applying the intrinsic value method. ##### [815-45-35-2](https://asc.understandingaccounting.org/asc/815/45/#815-45-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:39:43.163Z to 2026-09-10T01:39:43.163Z Record version: sha256:6180e60dc1f9424f93e96c3979aa9be1153a40750c92c05f80b607111d19c7d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The intrinsic value method computes an amount based on the difference between the expected results from an upfront allocation of the cumulative strike and the actual results during a period, multiplied by the contract price (for example, dollars per heating degree day). The intrinsic value (or intrinsic value measure) of the contract at interim dates shall be calculated based on cumulative differences between actual experience and the allocation through that date. The initial allocation of the cumulative strike amount shall not be adjusted over the term of the contract to reflect actual results. ##### [815-45-35-3](https://asc.understandingaccounting.org/asc/815/45/#815-45-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:39:43.163Z to 2026-09-10T01:39:43.163Z Record version: sha256:cbb4f29826512b0c9faef93301fc92b63e98355e233dd54050c6f67445068bdf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1 (paragraph [815-45-55-7](https://asc.understandingaccounting.org/asc/815/45/#815-45-55-7)) for an illustration of the accounting for an example degree-day forward contract. ##### [815-45-35-4](https://asc.understandingaccounting.org/asc/815/45/#815-45-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:39:43.163Z to 2026-09-10T01:39:43.163Z Record version: sha256:91e3b9af6159d93472b32149ac65a896850ba1e86518c7464f53a7983cabea40 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that purchases a non-exchange-traded option-based weather derivative in connection with nontrading activities shall amortize to expense the premium paid (or due) and apply the intrinsic value method described in paragraph [815-45-35-2](https://asc.understandingaccounting.org/asc/815/45/#815-45-35-2) to measure the contract at each interim balance sheet date. The premium asset shall be amortized in a rational and systematic manner. ##### [815-45-35-5](https://asc.understandingaccounting.org/asc/815/45/#815-45-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:39:43.163Z to 2026-09-10T01:39:43.163Z Record version: sha256:fb4e538271d40238c420d76fc3d27883eb51b7bd3ecdcf115ddf7ee956746412 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All entities that sell or write a non-exchange-traded option-based weather derivative shall recognize any subsequent changes 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.") currently in earnings—the premium shall not be amortized. ##### [815-45-35-6](https://asc.understandingaccounting.org/asc/815/45/#815-45-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:39:43.163Z to 2026-09-10T01:39:43.163Z Record version: sha256:3ce6ca663d80767b9ce93972a6ae74afd179d42c6b88f0a12af9463214097465 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1 (paragraph [815-45-55-7](https://asc.understandingaccounting.org/asc/815/45/#815-45-55-7)) for an illustration of the accounting for an example degree-day option contract. #### Trading Activities ##### [815-45-35-7](https://asc.understandingaccounting.org/asc/815/45/#815-45-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:39:43.163Z to 2026-09-10T01:39:43.163Z Record version: sha256:d0bb7937fbcd7f2c97392b1731a1495881156e618f08d7e7a7d20708b24ec0ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All subsequent changes in fair value of weather derivative contracts entered into under [trading](https://asc.understandingaccounting.org/glossary/t/#trading "An activity involving securities sold in the near term and held for only a short period of time. The term trading contemplates a holding period generally measured in hours and days rather than months or years. See paragraph 948-310-40-1 for clarification of the term trading for a mortgage banking entity.") or speculative activities shall be reported currently in earnings.