Hedge accounting is designed to record changes in the value of the hedged item and in the value of the hedging instrument in the same accounting period.

Question

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Hedge accounting is designed to capture the offsetting changes in the fair value of the hedged item and the hedging instrument in the same accounting period to provide a more accurate depiction of the entity's financial performance. This involves recognizing gains or losses from the hedging relationship in the income statement and adjusting the carrying amounts of both the hedged item and the hedging instrument in the balance sheet to reflect changes in their fair value.

Hedge Accounting Is Designed to Record Changes in the Value