TMI BlogHedge AccountingX X X X Extracts X X X X X X X X Extracts X X X X ..... The objective of hedge accounting is to represent, in the financial statements, the effect of an entity's risk management activities that use financial instruments to manage exposures arising from particular risks that could affect profit or loss (or other comprehensive income, in the case of investments in equity instruments for which an entity has elected to present changes in fair value in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a hedged item is a forecast transaction (or a component thereof), that transaction must be highly probable. An aggregated exposure that is a combination of an exposure that could qualify as a hedged item and a derivative may be designated as a hedged item. This includes a forecast transaction of an aggregated exposure (ie uncommitted but anticipated future transactions that would give rise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or loss will not be eliminated in the consolidated financial statements. Accounting for different types of hedge Fair Value Hedge In this risk being hedged in this type of hedge is a change in fair value of recognized asset or liability or an unrecognized firm commitment (or a component thereof), that is attributable to a particular risk and would affect profit or loss (or, for equity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er respective Ind AS. Hedging Instrument (e.g. future contract) is accounted as per derivative contract accounting but the fair value Gain/Loss at each balance sheet date will be recorded through Cash Flow Hedge Reserve (OCI) Instead of P L, and later when hedged item recorded in books it will be reclassified to P L. Hedge of a net investment in a foreign operation as defined in Ind AS ..... X X X X Extracts X X X X X X X X Extracts X X X X
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