CA Final · Financial Reporting · Hedge Accounting
Himalaya Foods Ltd's hedge accounting disclosures must meet the objectives of Ind AS 107 on hedge accounting. Which set correctly lists what the disclosures should provide information about?
Hedge accounting disclosures must cover the risk management strategy and its application, the possible effect of hedging on the amount, timing and uncertainty of future cash flows, and the effect of hedge accounting on the balance sheet, profit and loss, and changes in equity.
- AThe risk management strategy and its application, how hedging may affect the amount, timing and uncertainty of future cash flows, and the effect of hedge accounting on the balance sheet, statement of profit and loss and statement of changes in equityCorrect
- BOnly the effect of hedging on the statement of profit and loss and the tax rate
- CThe credit policy of the entity and the sales forecast for the next year
- DOnly the fair value of derivatives and the names of counterparties
Explanation
Ind AS 107 states that hedge accounting disclosures provide information about the entity's risk management strategy and how it is applied, how hedging activities may affect the amount, timing and uncertainty of future cash flows, and the effect of hedge accounting on the balance sheet, statement of profit and loss and statement of changes in equity. The other options omit these elements or list unrelated items.
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