Hedge Item

This topic has 3 replies, 2 voices, and was last updated 4 years ago by Stephen Widberg.

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March 1, 2022 at 1:09 am #649530
nurjiwa
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Why IFRS 9 not allow equity investment to be a hedge item in fair value hedge in consolidated financial statement ?
March 1, 2022 at 11:05 am #649548
Stephen Widberg
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It will.
If equity instrument is FVOCI, revalue both item and instrument and all gains and losses go to OCI.
If equity instrument is FVPL, revalue both item and instrument and all gains and losses go to P&L.
March 1, 2022 at 12:18 pm #649551
nurjiwa
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Sorry, but I dont really understand your answer. Can you clarify a bit more ?
March 1, 2022 at 3:12 pm #649566
Stephen Widberg
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If you own shares and are worried about their fair value, you could (say) enter into a forward contract to sell those.
In these circumstances you can use FV hedge accounting.
For FVOCI and FVPL please review our notes and lectures on financial instruments.
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