CIMA F3 Syllabus A. Financial policy decisions - Impact of hedge accounting on stakeholder assessment - Notes ^{8 / 12}

Hedge accounting matches the hedged item and the hedged instrument.

If a loss arises on a hedged item, if the hedging is effective, then an opposite gain will arise on the hedging instrument and vice versa.

Without hedge accounting, stakeholders (eg investors, lenders, customers and suppliers) cannot see hedges entered into from financial statements.

Hedge accounting allows stakeholders to make more informed decisions about a company
 
e.g. to lend to, invest in, or do business with a company.