Derivative toolkit: Hedging debt with derivatives

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 Chip Currie from our National Office to dive into the complexities of accounting for hedges of debt.In this episode, you will hear them discuss:1:30 - The economics of debt issuance and risk management decisions4:01 - How derivatives fit into these decisions8:55 - What to think about from a hedge accounting perspective11:30 - Cash flow and fair value hedge models20:46 - The impact of debt not denominated in your functional currency 24:03 - Advice for dealing with the complexities of applying hedge accountingWant to learn more? Listen to the first episode in our derivative toolkit series, Do I have a derivative?, and refer to our Derivatives and hedging and Financial statement presentation guides. 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.Chip Currie is a Partner in PwC’s National Office with over 25 years of experience assisting companies in resolving complex business and accounting issues. He concentrates on the accounting for financial instruments under both current and emerging standards and works with many of the firm's largest financial services clients and a number of non-financial service clients on treasury-related matters.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]. Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.