Part 4: The Impact of Adopting IFRS 9 on the Costs of Hedging

November 2014

In case you missed them here are: Part 1, Part 2 and Part 3 In Part 4: IFRS 9 introduces several new concepts to the area of hedge accounting. One of these new concepts is “costs of hedging.” This new idea is intended to bring relief to companies that use options and forwards to hedge certain financial exposures. As we will explore in this bulletin, the costs of hedging will likely introduce some added benefit for companies seeking to use options, but may also create additional complexity around using cross-currency swap products. This fourth bulletin will address:

  • • What are the Costs of Hedging?
  • • How Are Costs of Hedging Accounted for Under IAS 39?
  • • How Are Costs of Hedging Accounted for Under IFRS 9?
  • • How Should Companies Track and Recognise Costs of Hedging?
  • • Will the Costs of Hedging Impact Hedge Ineffectiveness?

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