excluded component

Broad Transactions2

1. 815-30Cash Flow Hedges815 Derivatives and Hedging

   ASC 815-30 provides the incremental accounting for cash flow hedges — derivatives designated as hedging the variability in expected future cash flows of a forecasted transaction or of a recognized variable-cash-flow asset/liability. The entire change in fair value of the hedging instrument that is included in the assessment of effectiveness is recorded in other comprehensive income and reclassified into earnings in the same period(s) the hedged forecasted transaction affects earnings, presented in the same income statement line item as the hedged item. The Subtopic also governs excluded components, quantitative effectiveness methods for interest rate hedges, and discontinuation/dedesignation (including immediate reclassification when the forecasted transaction is probable of not occurring).

2. 815-35Net Investment Hedges815 Derivatives and Hedging

   ASC 815-35 governs the subsequent measurement of hedges of a net investment in a foreign operation (designated under 815-20). The effective portion of the gain or loss on the hedging derivative — or the foreign currency transaction gain or loss on a nonderivative hedging instrument such as foreign-currency debt — is reported the same way as a translation adjustment, i.e., in the cumulative translation adjustment (CTA) section of other comprehensive income (815-35-35-1). An entity elects either the spot method or the forward method to assess effectiveness and must apply that choice consistently to all derivative net investment hedges (815-35-35-4).