Difference between derivatives accounting and hedging

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November 28, 2017 at 5:59 pm #418726
Arun
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Hi,

In financial instruments, what is the difference between the accounting for derivatives and hedging as apparently they both look the same?

Regards.
November 28, 2017 at 10:18 pm #418759
P2-D2
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Hi,

It depends on the use of the derivative as a hedging instrument. If it is in a fair value hedge then yes the treatment is the same. If it is in a cash flow hedge then the treatment is different.

Thanks
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