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Hi,
In this q, it was mentioned that the future purchase of steel was designated as a hedged item in a cash flow hedge.
My Q is, why was the cumulative gain of $3 m in OCI not reclassified to p/l when the steel was purchased on 1/5/X4?
Thank you
Hi,
It has been reclassified but in stages. $2 million is reclassified when the steel is bought. The remaining $1 million is reclassified when the steel is sold.
Thanks
Thanks for the quick reply.
But I was always under the impression that in a cash flow hedge of future purchase, the full 3 million should have been reclassified to p/l when the steel was purchased. How to know when to reclassify in stages and when the full amount should be reclassified at purchase?
Thanks
Hi,
It depends on the amounts recognised in profit or loss on recognition of the item.
Thanks
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