Refer to the annual report of CVS Corporation and the financial statements of Southwest Airlines Co. in the Supplement to Chapter 1. Refer to comprehensive income (loss) in each company’s statement of shareholders’

equity. Which item for each company refers to derivatives (a type of investment involving future contracts)? What causes either an unrealized gain or loss to occur? In the case of Southwest, find the accounting policy with regard to financial derivatives instruments in Note 1 to the financial statements. What problem does Southwest’s management face in determining the fair market value of its derivatives? How does management solve the problem?

Ethical Dilemma Case Insider Trading