Which of the following is not a criterion that must exist for hedge accounting to function:

Question

Quizplus · Accepted Answer

While hedging is typically used to mitigate potential losses, the enterprise does not necessarily have to suffer a loss in the absence of the hedge for hedge accounting to function. The key criteria are A, B, and C - that the item being hedged exposes the enterprise to price, currency, or interest rate risk, that the hedge position reduces that exposure, and that the hedge position is designated as a hedge.

Which of the Following Is Not a Criterion That Must