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How are Derivative Accounting Applied for Hedging Activities?

Author

Listed:
  • Doan Van Dinh

    (Ho Chi Minh City University of Industry)

  • Guangming Gong

    (Business School Hunan University)

Abstract

The derivative instruments accounting plays an important role in the development of the financial instruments markets, commodity market and in the risk management process. Because, the close relationship between the methods of derivative instruments accounting and the derivative instruments in the financial markets, commodity market for hedging activities. Moreover, they bring the relevance and reliability of Financial statements. Application of derivative instruments accounting is an essential factor for the development of financial market and economy. Currently, Vietnamese accounting is using historical cost methods for the financial assets; the fair value is not applied by the enterprises. How is difference between the historical method and fair value accounting? If the enterprises apply derivative instruments accounting, how will they have benefits? The article analyses and emphasizes usage of the derivative instruments accounting method and fair value of evaluating models to find out benefits to help managers and investors manage the risk.

Suggested Citation

  • Doan Van Dinh & Guangming Gong, 2013. "How are Derivative Accounting Applied for Hedging Activities?," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(4), pages 72-90, October.
    • Handle: RePEc:hur:ijaraf:v:3:y:2013:i:4:p:72-90
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    References listed on IDEAS

    as
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    2. Christian Laux & Christian Leuz, 2010. "Did Fair-Value Accounting Contribute to the Financial Crisis?," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 93-118, Winter.
    3. Laux, Christian & Leuz, Christian, 2009. "The crisis of fair-value accounting: Making sense of the recent debate," Accounting, Organizations and Society, Elsevier, vol. 34(6-7), pages 826-834, August.
    4. Joanne Horton & Richard Macve, 2000. "‘Fair Value’ for Financial Instruments: How Erasing Theory is Leading to Unworkable Global Accounting Standards for Performance Reporting," Australian Accounting Review, CPA Australia, vol. 10(21), pages 26-39, July.
    5. Zhang, Haiwen, 2009. "Effect of derivative accounting rules on corporate risk-management behavior," Journal of Accounting and Economics, Elsevier, vol. 47(3), pages 244-264, June.
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