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Part A: Accounting for Derivatives, underlying, Providing investor:,…

- - - - its value changes
        
        specified interest rate
        
        financial instrument price
        
        commodity price
        
        Foreign exchange rate
        
        index of prices or rates
        
        credit rating or credit index
        
        other variable
      - no initial net
        investmentt
      - settled at
        future date
    - - any changes
        in fair value
        
        Reserve accounts
        
        PnL
    - - Already dealt with by another standard
      - Must be physically
        delivered
        
        Cannot be
        net settled
  - - - PnL
        
        Fair value
        through PnL (FVTPL)
      - Hedge accounting
        rules in IFRS9
  - - - in an asset
        
        credit risk
      - in a liability
        
        impact of
        credit risk
  - - - Answer questions:
        
        is the host contract measured at FVTPL?
        
        No Separate
        
        Interest rate
        caps on debt
        
        Interest rate
        collars on debt
        
        Currency derivatives
        
        Inflation linked derivative in lease contracts
        
        Does embedded derivative meet the definition of a derivative on a stand-alone basic?
        
        is the embedded derivative closely related to host contract?
        
        Separate
        accounting
    - - Foreign exchange
        adjustment clause
      - price adjustments
        no relation to host contract
      - volume options on commodity contracts
    - - Can be separated embedded derivative?
        
        Fair value of the embedded derivative
        
        embedded derivative may be
        designated as a hedging
        instrument
        
        Fair value of the
        entire hybrid instrument
        
        Hybrid cannot be designated
        as a hedging instrument
        
        FVTPL
      - Valuing an ED
        at inception
        
        Non option
        
        Separated & fair
        value of zero
        
        option
        
        Separated & hava a value a inception
- - - - Not recorded in
        the accounts
  - - - Accounting standard
  - - - significantly
        contribute
        
        System risk across the gobal financial landscape
        
        triggering widespread economic turmmoil