Interest rate swaps

This instructional case is intended to introduce graduate and undergraduate financial accounting and finance students to derivatives using interest rate swaps. The major learning objective is to understand derivative accounting methods, using interest rate swaps, as proposed by the Financial Account...

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Bibliographic Details
Published in:Journal of accounting education 1997-10, Vol.15 (4), p.591-614
Main Authors: Grove, Hugh D., Bazley, John D.
Format: Article
Language:English
Subjects:
Accounting
Accounting policies
College students
Derivatives
Educational objectives
Exposure drafts
FASB exposure drafts
Interest rate swaps
Studies
Teaching
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Summary:This instructional case is intended to introduce graduate and undergraduate financial accounting and finance students to derivatives using interest rate swaps. The major learning objective is to understand derivative accounting methods, using interest rate swaps, as proposed by the Financial Accounting Standards Board's recent Exposure Draft. A secondary learning objective is to understand key features of a management control system for derivatives' activities. Both matched and unmatched interest rate swap examples are used in this case. The matched swap is based on an actual swap done by a bank for one of its customers. The case is written from the perspective of an audit partner writing a report summarizing interest rate swap accounting and related management controls for a client who wanted to recognize all gains and losses related to its interest rate swaps immediately in current earnings.
ISSN:0748-5751
1873-1996
DOI:10.1016/S0748-5751(97)00020-1