This Statement changes the disclosure requirements for derivative instruments
and hedging activities.
The Governmental Accounting Standards Board (GASB) today issued its Guide to Implementation of Statement 53 on Derivative Instruments
By requiring the fair values of derivative instruments
to be reported on the face of financial statements prepared using the accrual basis of accounting, Statement 53 brings additional transparency to those transactions," said Robert Attmore, chairman of the GASB.
The derivative instrument
income (expense) recorded in each period resulted from the decline (increase) in the calculated fair market value of the Company's derivative instrument
liabilities, due primarily to the decline (increase) in the market value of the Company's common stock during the reporting periods.
As a result of this accounting assessment, NJR has determined that certain of these derivative instruments
associated with its unregulated subsidiaries did not qualify as "cash flow hedges" under SFAS 133 and, as such, the change in the fair value of these instruments must be reflected in its consolidated statements of income.
Can the entity begin to use new strategies or derivative instruments
that will now qualify as hedges under Statement no.
The settlement of a derivative instrument
with a notional amount is determined by interaction of that notional amount with the underlying.
Northern defines Adjusted Net Income as net income excluding (i) (gain) loss on the mark-to-market of derivative instruments
, net of tax, (ii) restructuring costs, net of tax, (iii) impairment of oil and natural gas properties, net of tax and (iv) certain legal settlements, net of tax.
However, they are keen to do so in a Sharia-compliant manner, rather than imitating conventional derivative instruments
," he added.
In 1995 the Wisconsin Investment Board, which oversees the state's investment fund, lost more than $95 million through positions in leveraged derivative instruments
linked to Mexican interest rates and currency.
While state and local governments use a vast array of increasingly complex derivative instruments
to manage debt and investments, they also may be assuming significant risks.
Although the convenience and low cost of using derivative instruments
to meet portfolio objectives may have facilitated some investors reaching for more unconventional and possibly riskier strategies, it would be a serious mistake to respond to these developments by singling out derivative instruments
for special regulatory treatment.