IASB Proposes Additional Guidance on Hedge Accounting
CPA Letter | October 2007
The International Accounting Standards Board in fall 2007 published for public comment an exposure draft of proposed amendments to IAS 39, Financial Instruments: Recognition and Measurement. The amendments intended to clarify what can be designated as a hedged item in a hedge accounting relationship.
The exposure draft specified the risks that qualify for designation as hedged risks when an entity hedges its exposure to a financial instrument. In addition, it clarifies when an entity may designate a portion of the cash flows of a financial instrument as a hedged item.
The proposals respond to requests for additional guidance on what IAS 39 permits to be designated as a hedged item. Although the IASB said it is undertaking research that will ultimately lead to the replacement of IAS 39, that work is at an early stage. The IASB therefore said that it decided to propose the amendments contained in the ED.
The comment deadline on the ED was Jan. 11, 2008. For more information on IASB projects, go to www.iasb.org.
