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Net investment in a foreign operation hedge

Forums › Ask CIMA Tutor Forums › Ask CIMA F3 Tutor Forums › Net investment in a foreign operation hedge

Viewing 3 posts - 1 through 3 (of 3 total)
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  • May 11, 2017 at 3:30 pm #385790
    radhalakshmi
    Member
    • Topics: 18
    • Replies: 12
    • ☆

    Hello
    I have a question from hedge accounting. In the case of hedging net investment in a foreign operation, if we are hedging only a portion of the risk, what should be the accounting treatment of the unhedged potion?,i.e. should the gains/losses on the unhedged portion go to the P/L account or the OCI?

    Thanks.

    May 16, 2017 at 11:23 am #386429
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7079
    • ☆☆☆☆☆

    Hi,

    If there is an unhedged portion then it will go to profit or loss similar to that in the cash flow hedge.

    Thanks

    May 16, 2017 at 12:32 pm #386439
    radhalakshmi
    Member
    • Topics: 18
    • Replies: 12
    • ☆

    Hello
    Thanks for the reply. I came across a question which say that the net investment in the foreign subsidiary £750 and the foreign borrowing is £600, which will be used as a hedging instrument could you please explain the treatment for this under hedge accounting?

    Thanks.

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