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CA Final · Financial Reporting · Hedge Accounting

Pranav Industries Ltd is preparing its first hedge accounting note. Which of the following best reflects the objectives of hedge accounting disclosures under Ind AS 107 for risk exposures hedged with hedge accounting?

Hedge accounting disclosures under Ind AS 107 cover the risk management strategy, 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 equity, only for exposures where hedge accounting is elected.

  1. AInformation on the entity's risk management strategy, 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
  2. BInformation only on the fair value of derivatives held for trading
  3. CInformation on the tax effect of hedging and the auditor's view on effectiveness
  4. DInformation on all risk exposures hedged, whether or not hedge accounting has been elected

Explanation

The standard applies these disclosures to exposures the entity hedges and for which it elects hedge accounting. The disclosures cover risk management strategy, effect on amount, timing and uncertainty of future cash flows, and effect on the primary statements. Exposures without hedge accounting are not covered.

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