Which statement is correct about hedge accounting?
A)Hedge accounting must be reported in profit or loss.
B)Hedge accounting must be reported in OCI.
C)The financial effects of the hedging item and instrument offset 100% in hedge accounting.
D)It permits the hedging item and the hedging instrument to be recorded in the same way.

Question

Quizplus · Accepted Answer

Hedge accounting allows the financial effects of the hedging instrument and the hedged item to be recognized in the same accounting period, aligning the timing of the gains and losses from both for reporting purposes. This approach does not guarantee a 100% offset nor does it mandate reporting solely in profit or loss or OCI, but rather it aims to reflect the economic relationship and risk management strategy of the hedge.

Which Statement Is Correct About Hedge Accounting