This course addresses authoritative guidance on accounting for derivatives and hedging, highlighting key provisions and illustrating certain requirements. The authoritative guidance on accounting for derivatives and hedging activities by nongovernmental entities is set out in the Financial Accounting Standards Board's (FASB's) Accounting Standards Codification® (ASC), as Topic 815, Derivatives and Hedging. Upon completion of this course, you will be able to: name the three essential characteristics of a derivative; explain the treatment of embedded derivatives; identify whether or not a given item is within the scope of the derivatives and hedging guidance; explain the concepts of a fair value hedge, a cash flow hedge, and a net investment hedge; summarize the accounting for a fair value hedge, a cash flow hedge, and a net investment hedge; identify items prohibited as hedged items or hedging instruments; summarize the requirements for hedge designation and effectiveness; cite examples of common hedging relationships; explain the shortcut method for interest rate swaps; and state the overall objectives of disclosures about derivatives and hedging.