The formal documentation of a hedging relationship must include identification of: I. The hedging instriment
II. The hedged iterr
III. The rature of the risk being hedged
IV. How the entity will assesshedge effectiveness
A) I, II, III and IV.
B) I, II and III only.
C) I, II and IV only.
D) II, III and IV only.

Question

Quizplus · Accepted Answer

The formal documentation of a hedging relationship must include all listed elements: the hedging instrument, the hedged item, the nature of the risk being hedged, and how the entity will assess hedge effectiveness. These components are essential for demonstrating that the hedging relationship meets the criteria for hedge accounting.

The Formal Documentation of a Hedging Relationship Must Include Identification