Basic Principles of Hedge Accounting
AbstractThe development of the capital markets increases the key role of the financial manager both in using the new techniques for administrating the risks and in assessing hedge effectiveness. Risk means possible uncertainty regarding cash flows, influencing the fair value of assets and liabilities or the value of cash flow relating to future transactions of the entity. This article emphasizes that possible financial risk in international business, like as price risk, credit risk, risk of liquidity, can be hedged using financial instruments, especially derivatives, like as forward, futures, options and swaps. The accounting treatment for these instruments is presented in accordance to the basic principles of hedge accounting imposed by IAS 39. Additionally, there are references to the most important requirements regarding the accounting rules regarding recognition and measurement of hedged derivatives according to the Romanian regulations.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 17072.
Date of creation: Aug 2009
Date of revision:
Publication status: Published in Economy. Transdisciplinarity. Cognition 1.12(2009): pp. 172-181
hedge derivatives; fair value; hedge accounting; hedge effectiveness; risk management;
Find related papers by JEL classification:
- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
- D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
- F30 - International Economics - - International Finance - - - General
- E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
- G20 - Financial Economics - - Financial Institutions and Services - - - General
This paper has been announced in the following NEP Reports:
- NEP-ACC-2009-09-05 (Accounting & Auditing)
- NEP-ALL-2009-09-05 (All new papers)
- NEP-RMG-2009-09-05 (Risk Management)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rossi, Alessandro & Canpolongo, Francesca & Bichisao, Guido, 2002. "Hedge Accounting Within Ias 39," Economic and Financial Reports 2002/2, European Investment Bank, Economics Department.
- Bunea-Bontaş, Cristina Aurora & Petre, Mihaela Cosmina & Culiţă, Gica, 2009. "Issues on Hedge Effectiveness Testing," MPRA Paper 18131, University Library of Munich, Germany.
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