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CA Final · Financial Reporting · Hedge Accounting

Ind AS 107 requires hedge accounting disclosures to provide information about three matters. Which of the following correctly lists one of them, in the context of Nilgiri Foods Ltd that elects hedge accounting for its currency exposures only and not for its commodity exposures?

One required matter is the effect hedge accounting has had on the balance sheet, statement of profit and loss and statement of changes in equity, and this applies to the currency exposures for which hedge accounting is elected. Unhedged commodity exposures, amortised cost valuation or profit forecasts are outside this requirement.

  1. AThe effect that hedge accounting has had on the balance sheet, statement of profit and loss and statement of changes in equity, for the currency exposures to which hedge accounting is appliedCorrect
  2. BThe effect of the commodity exposures on the entity's cash flows, since all hedged and unhedged risks must be covered
  3. CThe valuation methodology for all non-hedged financial assets measured at amortised cost
  4. DThe entity's forecast of next year's profit after tax

Explanation

Para 21A applies the hedge accounting disclosures to risk exposures that the entity hedges and for which it elects hedge accounting. They cover risk management strategy, effect on amount, timing and uncertainty of future cash flows, and the effect on the balance sheet, profit and loss and changes in equity. Commodity exposures without hedge accounting are outside these disclosures.

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