Commentary

D1.852 Hedging for accounting purposes

Corporate tax
Corporate tax | Commentary

D1.852 Hedging for accounting purposes

Corporate tax | Commentary

D1.852 Hedging for accounting purposes

Under IFRS, UK GAAP incorporating FRS 26 (for accounting periods beginning before 1 January 2015), and new UK GAAP where a company adopts either FRS 101 or FRS 102 (for accounting periods beginning on or after 1 January 2015), a derivative can be accounted for as a fair value hedge, a cash flow hedge or a hedge of a net investment in a foreign operation.

Where a company uses cash flow hedging, any profits or losses arising on a derivative contract that are reflected in other comprehensive income, are included in computing its profits and losses for purposes of the derivative contracts legislation1. Accordingly, even if a derivative contract is a

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