Handbook: Derivatives and hedging
Handbooks | February 2026
Latest edition: Our in-depth guide on derivatives and hedge accounting, with our latest interpretations.
Using Q&As and examples, we provide interpretive guidance on derivatives and hedging. This February 2026 edition includes updates for the following: guidance on disclosures in ASC 815, removal of effective dates and transition for ASU 2022-01, and new and updated interpretations based on questions we experience in practice.
Applicability
- Companies that have derivative instruments
- Companies that have hybrid instruments
- Companies that apply hedge accounting
Key impacts
When the first comprehensive guidance on derivatives and hedge accounting was issued in 1998, the accounting requirements in this area were widely acknowledged as the most detailed and complex in US GAAP.
We have seen ongoing changes made to those requirements. For nearly 20 years, the changes added to the rules and complexity. Since then, the changes have been focused on reducing operational burden, expanding the circumstances in which hedge accounting is permissible and better reflecting risk management practices. The recent issuance of two new standards on derivatives and hedging continues this trend.
Our objective with this publication is to help you navigate this complex area. We provide you with insights, examples and perspectives based on our years of experience – so you can understand the requirements and, when options are provided, decide which alternatives are right for you.
Report contents
- Scope of ASC 815
- Definition of a derivative
- Embedded derivatives
- Accounting for derivatives
- General hedging requirements
- Qualifying criteria and accounting for fair value hedges
- Qualifying criteria and accounting for cash flow hedges
- Hedging foreign currency exposures
- Net investment hedges
- Hedge effectiveness
- Presentation
- Disclosures
- Private companies and entities that do not report earnings
- Effective date and transition
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FASB issues ASU on derivative scope refinements
The ASU adds a scope exception from derivative accounting and clarifies the interaction between ASC 815 and ASC 606.
FASB issues ASU on hedge accounting improvements
The ASU is intended to more closely align financial reporting with the economics of an entity’s risk management activities.
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