CA Final · Financial Reporting · Hedge Accounting

Bharat Polymers Ltd applies hedge accounting to its foreign currency and commodity price exposures. While drafting its Ind AS 107 disclosures, the finance team asks how the risk categories used to split the hedge accounting disclosures should be determined. Which approach is consistent with Ind AS 107?

Risk categories must be based on the risk exposures the entity chooses to hedge and for which it applies hedge accounting, and the same categories must be used consistently across all hedge accounting disclosures. They are not taken from segments or varied by table.

1. ADetermine risk categories on the basis of the risk exposures the entity decides to hedge and for which hedge accounting is applied, and use them consistently for all hedge accounting disclosuresCorrect
2. BUse the risk categories that appear in the entity's statutory segment reporting, regardless of which exposures are hedged
3. CDetermine risk categories separately for each hedge accounting disclosure so that each table shows the most favourable grouping
4. DUse only the categories of currency risk and interest rate risk, since other risks are excluded from hedge accounting disclosures