FASB amends derivative definition, Statement 133.

• Author: Heffes, Ellen M.
• Position: Domestic - Financial Accounting Standards Board - Brief Article

The Financial Accounting Standards Board (FASB) issued an Exposure Draft to clarify the definition of a derivative. Amendment of Statement 133 on Derivative Instruments and Hedging Activities amends Statement No. 133, Accounting for Derivative Instruments and Hedging Activities.

The purpose of the Exposure Draft is to improve financial reporting by requiring that financial contracts with comparable characteristics be accounted for in the same way. The Statement would clarify under what circumstances a financial contract -- either an option-based or non-option-based contract -- with an initial net investment would meet...