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Hedging Accounting – Qualified Hedge
Risk Management
Strategy
Risk Management Nature of Risk
Objective Being Hedged
At the inception of the hedging relationship,
there is formal designation and documentation.
Identification of Identification of
Hedged Item Hedging Instrument
Method of Assessing Hedge Effectiveness
and Measuring Hedge ineffectiveness
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Hedge Effectiveness
Hedge Hedge
Effectiveness Ineffectiveness
Extent to which changes in Extent to which the changes
the fair value or the cash in the fair value or the cash
flows of the hedging flows of the hedging
instrument offset changes in instrument are greater or
the fair value or the cash less than those on the
flows of the hedged item hedged item
Assess hedge effectiveness requirements at the inception of the hedging
relationship, and on an ongoing basis (at a minimum, at each reporting date
or upon a significant change in the circumstances, whichever comes first).
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