Government Transfers - Deloitte
Government Transfers - Deloitte
Government Transfers - Deloitte
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Derivatives and Embedded Derivatives<br />
Derivatives<br />
•Characteristics:<br />
•Value changes with<br />
underlying variable<br />
•Requires little or no initial<br />
net investment<br />
•Settled at a future date<br />
•Examples:<br />
•Interest rate swaps<br />
•Forward contracts<br />
•Cross currency swaps<br />
•Written options<br />
•Purchased options<br />
Embedded<br />
Derivatives<br />
• Component within contract<br />
• Accounted for separately if:<br />
•Not closely related to host<br />
contract<br />
•Would meet the definition of<br />
a derivative<br />
•Host contract is not<br />
accounted for at fair value<br />
•Possible examples:<br />
•Contract denominated in<br />
foreign currency<br />
•Contract pricing linked to<br />
index
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