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In a cf hedge ,do we adjust the fair value of the instrument for any changes in value?
Thanks
“If the hedged item eventually results in the recognition of a non-financial asset or liability, the gain or loss held in equity must be recycled in one of the two following ways:
the gain / loss goes to adjust the carrying amount of the non-financial asset / liability, or
the gain / loss is transferred to profit and loss in line with the consumption of the non-financial asset / liability”
That’s from the Kaplan text, page 595.
There is more on that page that relates to the re-measurement of the hedging instrument at fair value – but I’m sure that you could look that up for yourself 🙂
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