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CA Final · Financial Reporting · Hedge Accounting

In the previous year, Yamuna Steels Ltd applied cash flow hedge accounting to a forecast purchase of an imported furnace. In the current year, management decided the purchase is no longer expected to occur because the project was shelved. Which disclosure does Ind AS 107 specifically require for cash flow hedges in this situation?

For cash flow hedges, the entity must describe any forecast transaction for which hedge accounting was used in the previous period but which is no longer expected to occur, as required by Ind AS 107 paragraph 23F. Here, the shelved furnace purchase must be described.

  1. AA description of any forecast transaction for which hedge accounting had been used in the previous period but which is no longer expected to occurCorrect
  2. BNo disclosure, because the transaction never took place
  3. CA disclosure only if the forecast transaction was expected to occur within three months
  4. DA description only of the hedging instrument, not of the forecast transaction

Explanation

Paragraph 23F requires, for cash flow hedges, a description of any forecast transaction for which hedge accounting had been used in the previous period but which is no longer expected to occur. Non-occurrence does not remove the disclosure, and no time threshold is stated.

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