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ASC 815-10-15-88&lt: Definition of an underlying with several examples provided.

ASC 815-10-15-89: Includes in the definition of an underlying “…any variable whose changes are observable or otherwise objectively verifiable. An underlying may be a price or rate of an asset or liability but is not the asset or liability itself.”

ASC 815-10-15-93: Defines a notional as a quantity of some unit of measure, which can be currency units (dollars, pounds, euros, rubles, etc.), shares of stock, bushels, barrels or any other unit specified in the contract.

The settlement amount of a derivative is based on the interaction of the underlying with the notional. This interaction may be simple multiplication, or there may be a leverage factor or other constant(s). In the case of leverage or other constant factor, the actual notional amount is the stated notional amount as adjusted for such leverage or other constant factor.

See paragraphs 815-10-55-5 through 55-7 for related implementation guidance.

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