fair value hedge

Broad Transactions3

1. 815-25Fair Value Hedges815 Derivatives and Hedging

   ASC 815-25 supplies the incremental accounting rules for fair value hedges that qualify under the designation criteria in ASC 815-20. The core mechanic (815-25-35-1) is that the gain or loss on the hedging instrument goes to current earnings, and the change in fair value of the hedged item attributable to the hedged risk adjusts the hedged item's carrying amount and also goes to current earnings, both presented in the same income statement line item as the hedged item's earnings effect; any mismatch therefore falls automatically into earnings. The Subtopic also governs basis adjustments and their amortization, portfolio layer method hedges of closed portfolios, interaction with impairment/credit loss rules, and mandatory or voluntary discontinuation of hedge accounting.

2. 815-954Health Care Entities815 Derivatives and Hedging

   ASC 815-954 tells not-for-profit, business-oriented health care entities how to apply derivative and hedge accounting. The core rule is parity with for-profit entities: items that would hit a for-profit's income from continuing operations must hit the NFP health care entity's performance indicator, and items excluded (e.g., amounts in other comprehensive income) must be excluded from the performance indicator. Because these entities need not present a separate equity component, the guidance substitutes tailored disclosures about the accumulated derivative gain or loss excluded from the performance indicator.

3. 848-40Fair Value Hedges848 Reference Rate Reform

   ASC 848-40 was the placeholder subtopic for fair value hedges within Topic 848, Reference Rate Reform. Every paragraph in its Overview (05), Scope (15), and Recognition (25) sections was superseded by ASU 2020-04, so the subtopic contains no operative guidance. Optional expedients and exceptions for fair value hedging relationships affected by reference rate reform reside instead in ASC 848-50 (Hedging — General) and the related hedging subtopics.