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Accounting
Fair value measurement, hedge accounting, embedded derivatives and disclosure under Japanese GAAP, IFRS and US GAAP.
Practitioner7 pagesAdvanced2 pages
1Fair Value Measurement
- PractitionerFair Value Measurement: IFRS 13, ASC 820 and the Fair Value HierarchyFair value is the price received to sell an asset or paid to transfer a liability (an exit price). The entity's intention to hold or settle is not relevant.
- PractitionerJapan's Fair Value Measurement StandardThe standard applies from the beginning of a fiscal year, and early application was also permitted.
- AdvancedCVA and DVA in AccountingThe fair value of a liability includes the firm's own nonperformance risk, so the fair value of a derivative includes CVA and DVA.
2Hedge Accounting
- PractitionerHedge Accounting BasicsA hedging instrument is measured at fair value but a hedged item is not always, so the two gains or losses appear in different periods.
- PractitionerDeferral Hedge Accounting under Japanese GAAPUnder Japanese GAAP, deferral hedge accounting is the basic method, and the fair value hedging method is an exception.
- AdvancedHedge Accounting under IFRS 9 and ASC 815The three types are treated similarly, but IFRS 9 recognizes ineffectiveness in profit or loss, while ASC 815 does not measure it separately.
3Embedded Derivatives and Disclosure
- PractitionerEmbedded DerivativesUnder IFRS 9, a derivative in a financial-asset host is not separated; ASC 815-15 applies the test whatever the host.
- PractitionerJapanese GAAP vs IFRS vs US GAAPOn embedded derivatives, IFRS 9 starts from whether the host is a financial asset, while ASC 815 judges by the same conditions whatever the host.
- PractitionerDisclosures in the NotesJapanese GAAP requires contract amounts and fair values by type of underlying, and adds valuation gains and losses for transactions to which hedge accounting is not applied.