Page 97 - F3 Integrated Workbook STUDENT 2019
P. 97
Hedge accounting
Example 6
Which TWO of the following are conditions which must exist in order for
hedge accounting to be permitted under IFRS 9 Financial Instruments?
A There is formal designation and documentation of the hedging
relationship at the inception of the hedge.
B The hedge is expected to be at least 95% effective.
C The effectiveness of the hedge has to be verified by the entity's auditors.
D The hedge is assessed on an ongoing basis and has remained effective
throughout the financial reporting periods for which it was designated.
Solution
The answer is (A) and (D).
The effectiveness does not have to be verified by the auditors.
Under IFRS 9 the effectiveness does not have to be quantified.
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