Hedge accounting: hedge effectiveness testing
At this meeting the Board continued its discussions of hedge effectiveness testing (ie whether a hedging relationship qualifies for hedge accounting). The Board discussed a staff paper summarising the different approaches and elements for an effectiveness test.
No decisions were made.
Hedge accounting: eligible hedged items
At this meeting the Board discussed whether part of an existing item (eg part of a firm commitment or a debt instrument, etc) could be identified as a portion or 'layer' of an entire item for the purpose of designation as a hedged item.
The Board considered specific examples. For the type of examples presented, the Board tentatively decided that when an entity's risk management strategy is to hedge a portion or 'layer' of an entire item, any hedge designation for accounting purposes must be on the same basis.