IFRS Topics

Last update 22/12/2019 Hedging of a highly probable debt issuance – Q: Does IFRS 9 allow a highly probable forecast foreign currency debt issuance as eligible as a hedged item in a cash flow hedge of interest rate risk if the currency of issuance is not yet known? Considerations: At 1 January 200X, entity A, … Read more

Last update 27/11/2019 IAS 39 placed several restrictions on the types of instruments that can qualify as hedging instruments for hedge accounting purposes. This is to reflect that hedge accounting was mainly intended to address accounting mismatches that resulted from requiring derivatives to be accounted for at fair value through profit or loss. IFRS 9 … Read more

Last update 27/11/2019 Hedging a component of a group provides clear examples of hedge accounting in practice. A group designation can also consist of hedging a component of a group of items, such as a layer component of a group. A component could also be a proportion of a group of items, such as 50% … Read more

Last update 27/11/2019 Hedges of exposures affecting OCI is showing examples of exposures as hedged items recorded through other comprehensive income (OCI) and hedge accounting of Aggregated exposures. Topics hide Hedges of exposures affecting other comprehensive income Aggregated exposures Hedges of exposures affecting OCI Related posts: Hedges of exposures affecting other comprehensive income Only hedges … Read more

Last update 27/11/2019 Hedged items General requirements discusses the eligible hedged item and risk components in non-financial items. The general requirements of what qualifies as an eligible hedged item are unchanged compared to IAS 39. A hedged item can be: Hedged items General requirements A recognised asset or liability Hedged items General requirements An unrecognised … Read more

Last update 23/12/2019 Hedged item Risk components Separately identified – Q: What is the necessary evidence to document that changes in cash flows or fair value attributable to changes in a hedged component are separately identifiable? Does a risk component that is an input in the manufacturing process of a non-financial item suffice? Considerations: Hedged … Read more

Last update 23/12/2019 Hedged item Risk components Reliable measurement – Q: What evidences that changes in cash flows or fair value attributable to changes in a hedged component are reliably measurable? Considerations: Hedged item Risk components Reliable measurement To be eligible for designation as a hedged item, a risk component must be a separately identifiable … Read more

Last update 23/12/2019 Hedged item Risk components Market structure – Q: What is the relationship between a risk component in an eligible hedged component of a non-financial item and the market structure in which the hedging activity takes place? Hedged item Risk components Market structure Considerations: Hedged item Risk components Market structureTo be eligible for … Read more

Last update 22/12/2019 Hedged item Cash flow hedges Future interest flows – Q: Does IFRS 9 allow the following cash flow hedge designations of future interest flows? Considerations:Consider the following cases. Note: In all scenarios both the swap and the hedged debt are denominated in Company A’s functional currency. Case 1Company A enters into a … Read more

Last update 27/11/2019 Risk components General requirements is about hedging risk components be it financial or non-financial risks (new in IFRS 9). Instead of hedging the total changes in fair values or cash flows, risk managers often enter into derivatives to only hedge specific risk components. Managing a specific risk component reflects that hedging all … Read more