Hedge accounting . Principi contabili e informativa finanziaria Prof.ssa Pucci Sabrina a.a .201 3-2014. Risk definition. Risk is an abstract term (we are all faced with risk in our everyday lives)
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Principi contabili e informativa finanziaria
Prof.ssa Pucci Sabrina
It is necessary that:
This is a technique that modifies the normal basis for recognising gains and losses (revenues and expenses) associated with a hedged item or a hedging instrument. This enables gains and losses on the hedging instrument to be recognised in the P&L in the same period as offsetting losses and gains on the hedged item.
Hedge accounting takes three forms under IAS – IFRS:
To be able to apply hedge accounting, very strict criteria must be met at inception and throughout the life of the hedging relationship:
In year x, the entity acquires a derivative to hedge risk exposure of an item that is already recognised in the balance sheet. The derivative matures in x+1 and the hedged item settles in x+2.
It can be observed that only the fair value hedge provides perfect synchronisation between the hedging instrument and the hedged item recognition.