In our Toolkit podcast series, we take a deep dive into one accounting topic each month that goes beyond the basics and into areas that require judgment. This month, we are covering derivatives – a complicated area that generates numerous questions. 

In this episode, Heather Horn was joined by Bret Dooley and Chris Gerdau from our National Office to dive into how to identify derivatives, explaining how to navigate through the definition, scope exceptions, and embedded derivative analysis. 

In this episode, you will hear them discuss:

• 1:30 - How broad the definition of a derivative is and lesser known examples
• 4:21 - Applying the three criteria needed to meet the definition
• 14:15 - Understanding the scope exceptions 
• 25:45 - What you need to know about the criteria for bifurcating embedded derivatives
• 32:00 - Common examples of embedded derivatives and “hidden” features that need to be assessed  
• 35:10 - A summary of key takeaways and an update on derivative standard setting

Want to learn more? Refer to our Derivatives and hedging guide and our Financial statement presentation guide, and stay tuned for more insightful episodes in the coming weeks.

Bret Dooley is a Deputy Chief Accountant in PwC’s National Office and the financial instruments accounting leader. He has over 25 years of experience specializing in the financial services, banking, and capital markets industries. Bret focuses on emerging financial reporting issues relating to financial instruments, developing interpretive guidance, and assisting clients in resolving complex accounting matters.

Chris Gerdau is a partner in PwC’s National Office specializing in accounting for financial instruments and banking-related topics. Chris also conducts technical reviews of SEC filings and provides technical support to PwC’s practice offices. With over 25 years of experience, Chris’s client service expertise includes the banking, capital markets, and insurance industries.

Heather Horn is PwC’s National Office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series. With over 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.

Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to [email protected]. 

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