Volume 3, No. 6


A Matter Of Interpretation:  When recognizing derivative financial instruments on their balance sheets, some institutions have exercised considerable latitude in the past: by netting assets resulting from gain positions against liabilities associated with loss positions and reporting a single balance, they have been able to minimize the size of the reported positions. A recently effective standard requires the gross recognition of such positions in most cases. While improving the depiction of financial position, the changes in the complexion of balance sheets make year to year comparisons less meaningful.

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