Skip to content

Summary of Hedge Types

December 21, 2015
Purpose Recognition
Fair Value Hedge Offset exposure to changes in fair value of an asset or liability. Gains and loses are recognized in the income statement.
Cash flow hedge Offset exposure to variable cash flows from anticipated transactions. Gains and loses are reported in equity. The gains and loses are eventually recognized in the income statement.
Net investment hedge of a foreign subsidiary Offset exposure from an existing investment in a foreign subsidiary. Gains and loses are recognized in equity along with translation gains/loses.
Advertisements
Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: