trading or speculative activities

Broad Transactions1

1. 815-45Weather Derivatives815 Derivatives and Hedging

   ASC 815-45 governs the accounting for weather derivatives that are not exchange-traded (exchange-traded weather derivatives fall under ASC 815-10), and excludes insurance contracts that pay only upon an insurable event causing a liability or adverse change in value of a specific asset or liability. If entered into for nontrading purposes, forward-based weather derivatives are accounted for under the intrinsic value method, purchased options are recorded as a premium asset amortized to expense plus intrinsic value measurement, and written options are recorded as a premium liability remeasured to fair value through earnings. All weather derivatives entered into for trading or speculative activities are recognized as assets or liabilities at fair value with subsequent changes in fair value in earnings.