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Dear Tutor,
How do we normally do the accounting treatment for fair value hedges and cash flow hedges.
Thank you in advance.FV Hedges – the hedging instrument will be measured and re-measured at fair value with all gains and losses reported in Statement of Income. The hedged portion of the matter which is being hedged is also remeasured at fair value with gains and losses also going through Statement of Income
CF Hedges – the hedging instrument is again remeasured at fair value. Gains / losses on the part of the instrument deemed to be effective are taken to equity and recorded within the Statement of Changes in Equity.
The gains / losses on the ineffectual part go though Statement of Income
OK?
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