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All reporting entities must apply ASC 815 to all financial instruments or other contracts that meet the definition of a derivative and do not qualify for one of its scope exceptions.

2.2.1 Practicability of estimating fair value

All financial instruments that meet the definition and do not qualify for a scope exception are accounted for as derivatives under ASC 815. There is no practicability exception that permits a reporting entity to avoid calculating the required fair value measurements for derivative instruments; the FASB has stated that it believes fair value is the only relevant measurement attribute for derivatives.

2.2.2 Unit of account

ASC 815-10-15-9 specifies that two or more derivatives should be viewed as a unit if they are entered into contemporaneously and in contemplation of each other, with the same counterparty, relating to the same risk, with no economic or substantive business purpose for structuring them separately. Therefore, if the two contracts together result in no net exposure, a reporting entity may have created a combined financial instrument that is not in the scope of ASC 815 and its components cannot be separated for hedging purposes.
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