Objective of hedge accounting provides the introduction a a few narratives to obtain an understanding of hedge accounting under IFRS 9. All hedge accounting narratives are listed here. Every entity is exposed to business risks from its daily operations. Many of those risks have an impact on the cash flows or the value of assets and liabilities, and therefore, ultimately affect profit or loss. In order to manage these risk exposures, companies often enter into derivative contracts (or, less commonly, other financial instruments) to hedge them.
Hedging can, therefore, be seen as a risk management activity in order to change an entity’s risk profile. Objective of hedge accounting
Applying the normal IFRS accounting requirements to those … Read more