Summary of Statement No. 80
Summary of Statement No. 80
Accounting for Futures Contracts (Issued 8/84)
Summary
This Statement establishes standards of accounting for
exchange-traded futures contracts (other than contracts for foreign
currencies). This project was undertaken to consider two AICPA
Issues Papers that concern futures contracts and because the Board
was aware of diversity in practice in accounting for futures
contracts.
This Statement requires that a change in the market value of an open futures contract be recognized as a gain or loss in the period of the change unless the contract qualifies as a hedge of certain exposures to price or interest rate risk. Immediate gain or loss recognition is also required if the futures contract is intended to hedge an item that is reported at fair value (which frequently will be the case for futures contracts used as hedges by investment companies, pension plans, and broker-dealers).
If the hedge criteria specified in this Statement are met, a change in the market value of the futures contract is either reported as an adjustment of the carrying amount of the hedged item or included in the measurement of a qualifying subsequent transaction. Enterprises are required to cease accounting for a contract as a hedge if high correlation of changes in the market value of the futures contract and the effects of price or interest rate changes on the hedged item has not occurred.
This Statement is effective for futures contracts
entered into after December 31, 1984, with earlier application
encouraged in financial statements that have not been previously
issued.