Practical guide on general hedge accounting Dec 2013 | Page 2
Practical guide
Contents
1.
Introduction
1
1.1.
Overview of IFRS 9
1
1.2.
General hedge accounting
1
2.
Hedge accounting
3
2.1.
What is hedge accounting?
3
2.2.
Accounting for hedges
3
3.
Qualifying criteria for hedge accounting
6
3.1.
Formal designation and documentation
7
3.2.
Eligible items
7
3.3.
Hedge effectiveness
7
3.4.
Discontinuation of hedge accounting
11
4.
What can be designated as hedging instruments?
14
4.1.
Derivative financial instruments
15
4.2.
Non-derivative financial instruments measured at fair value through P&L
15
4.3.
Embedded derivatives
15
4.4.
Hedging with purchased options
15
4.5.
Hedging with forward contracts
16
4.6.
Accounting for currency basis spreads
17
5.
What can be designated as hedged items?
18
5.1.
Definition of hedged item
18
5.2.
Risk components of non-financial items
18
5.3.
Hedging groups of net positions
20
5.4.
Hedging layers of a group
21
5.5.
Aggregated exposures
21
6.
Alternatives to hedge accounting
22
6.1.
Extended use of fair value option for ‘own use’ contracts
22
6.2.
Option to designate a credit exposure at fair value through P&L
22
7.
Disclosures
24
8.
Effective date and transition
25
General hedge accounting
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