Course 2201: US GAAP Accounting for Financial Instruments (2 days)

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1 Course introduction In recent years the use of derivatives and other financial instruments, in particular for treasury risk management, has increased substantially. This has resulted in complex accounting rules issued by the Financial Accounting Standards Board (FASB) in order to properly reflect the impact of these items in the financial statements. These complex rules have made the application of US GAAP in the area of financial instruments challenging. This two-day course provides an in-depth illustration and explanation of the requirements of ASC 825 Financial Instruments, ASC 815 Derivatives and Hedging, and ASC 820 Fair Value Measurement. Utilizing practical examples and hands-on exercises, this course demonstrates the rules for classification, recognition, derecognition, measurement and impairment of financial instruments; application of the effective interest method; and determining the distinction between financial liabilities and equity. In clear and simple language, our specialist instructors also explain the rules for derivatives, embedded derivatives, and hedge accounting. The extensive disclosure requirements in relation to financial instruments are also discussed and illustrated. This course answers questions such as: How should financial instruments be classified and what are the changes effective from 2018? What are the restrictions on reclassifications of financial assets? What is the fair value option and how is it applied? How is the effective interest rate calculated? How is impairment of financial assets measured and accounted for, and what are the proposed changes to measurement of credit losses? What are the requirements for hedge accounting? When should embedded derivatives be separated? What are the current disclosure requirements in relation to financial instruments and what is the impact of changes to the accounting for financial instruments? How and when is GAAP changing as a result of amendments published to date? Topics Classification and presentation of financial instruments Printed from on 22 Nov 2018 Page 1 of 5

2 Classification of financial assets Classification of financial liabilities Liability and equity classifications Offsetting financial assets and financial liabilities Recognition and initial measurement Trade date accounting versus settlement date accounting Reclassification of financial assets Subsequent measurement of financial instruments Amortized cost and application of effective interest rate method Subsequent measurement of financial instruments using fair value Subsequent measurement of financial assets classified as available for sale Measurement of illiquid instruments Measurement of unlisted equities Accounting for derivative financial instruments Overview of derivative financial instruments: forwards, futures, swaps and options Initial recognition and accounting for changes in fair value of derivatives Embedded derivatives and separation criteria Impairment of financial assets Evidence of impairment Measurement and accounting for impairment of financial assets carried at amortized cost Measurement and accounting for impairment of financial assets classified as available for sale Derecognition of financial instruments Derecognition of financial assets assessment of transfer of control Derecognition and restructuring of financial liabilities Hedge accounting Criteria for hedge accounting Hedging instruments and hedged items Types of hedging operations Fair value hedge accounting Cash flow hedge accounting Hedge of a net investment in a foreign operation Documentation and effectiveness requirements Discontinuation of hedge accounting Printed from on 22 Nov 2018 Page 2 of 5

3 Financial instrument disclosures ASU Recognition and Measurement of Financial Instruments - effective for public entities for fiscal years beginning after December 15, 2017 ASU Measurement of Credit Losses on Financial Instruments - the expected loss model for impairment, effective for public entities for fiscal years beginning after December 15, 2019 Proposed ASU on hedging activities - targeted improvements to existing GAAP Teaching method Group live instruction with interactive participation encouraged, cases, examples, open discussions Worked examples that illustrate the classification, recognition, and derecognition of financial instruments Live demonstrations of the calculation of effective interest rates and application of the effective interest method under various scenarios Exercises to illustrate application of the effective interest method, accounting for financial instruments, and derecognition rules Illustration of the rules for derivatives, embedded derivatives, and hedge accounting Discussion of how to make a smooth transition to the new pronouncements in relation to accounting for financial instruments Discussion of the disclosure requirements for financial instruments, including illustrative and real-world financial statements All participants receive a comprehensive binder containing copies of the presentation slides, handouts and other course materials Electronic copies of exercise and case study solutions will be available to participants Prerequisites Understanding of basic accounting principles based on any national standards. Course benefits Understand and apply the US GAAP recognition, measurement and derecognition requirements for financial assets and financial liabilities. Learn the complex rules for classifying financial assets into trading, available-for-sale and held-to-maturity portfolios and analyse the amended rules effective from Printed from on 22 Nov 2018 Page 3 of 5

4 Compute the effective interest rate and calculate the amortised cost of financial assets and financial liabilities using the effective interest method. Determine fair value under the mark-to-market valuation requirements for unlisted equity and illiquid debt. Understand the different types of derivative instruments, and how they are recognized at inception and accounted for subsequently to maturity. Calculate impairment losses for financial assets and analyse the amended approach effective from Apply the stringent requirements for hedge accounting and analyse the key proposed changes. Participate in an interactive case study that includes the documentation and effectiveness testing requirements for use of hedge accounting. Comply with the extensive disclosure requirements for financial instruments. Who should attend? Financial and management accountants in corporate and financial institutions Staff in treasury, operations, risk management, IT or compliance departments Internal auditors of entities reporting under US GAAP External auditors with clients facing the complexities and challenges in applying US GAAP for financial instruments. Staff and management of Central Banks, Deposit Insurance Entities, and other agencies with regulatory responsibility in the financial services sector Financial analysts seeking to improve their understanding of the accounting and disclosures related to financial instruments and the changes impacting US GAAP Professors and other instructors with educational institutions CPE / CPD Accreditation NASBA IASeminars is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: Field of study: Accounting Printed from on 22 Nov 2018 Page 4 of 5

5 ICAEW Partner in Learning IASeminars is proud to have been named as an ICAEW Partner in Learning, working together to offer the ICAEW IFRS Certificate to our clients worldwide. ICAEW (The Institute of Chartered Accountants in England and Wales) is a world leading professional membership organisation that promotes, develops and supports over 145,000 chartered accountants worldwide. CPE certificates obtained from attending IASeminars courses are an ideal way for ICAEW members and others to demonstrate their continuing professional development, provided that the topic is relevant to their learning and development needs. Texas State Board of Public Accountancy IASeminars is registered with the Texas State Board of Public Accountancy as a CPE sponsor. Our CPE Sponsor ID is: This registration does not constitute an endorsement by the Board as to the quality of our CPE Program. In House To bring this course in-house please contact us and we will be pleased to assist Printed from on 22 Nov 2018 Page 5 of 5