ipsas 29—financial instruments: recognition and measurement - IFAC

FINANCIAL INSTRUMENTS: RECOGNITION AND MEASUREMENT
101. If only particular risks attributable to a hedged item are hedged, recognized
changes in the fair value of the hedged item unrelated to the hedged risk are
recognized as set out in paragraph 64.
102. An entity shall discontinue prospectively the hedge accounting specified in
paragraph 99 if:
(a) The hedging instrument expires or is sold, terminated or exercised (for
this purpose, the replacement or rollover of a hedging instrument into
another hedging instrument is not an expiration or termination if such
replacement or rollover is part of the entity’s documented hedging
strategy);
(b) The hedge no longer meets the criteria for hedge accounting in
paragraph 98; or
(c) The entity revokes the designation.
103. Any adjustment arising from paragraph 99(b) to the carrying amount of a
hedged financial instrument for which the effective interest method is used
(or, in the case of a portfolio hedge of interest rate risk, to the separate line
item in the statement of financial position described in paragraph 100) shall
be amortized to surplus or deficit. Amortization may begin as soon as an
adjustment exists and shall begin no later than when the hedged item ceases
to be adjusted for changes in its fair value attributable to the risk being
hedged. The adjustment is based on a recalculated effective interest rate at
the date amortization begins. However, if, in the case of a fair value hedge of
the interest rate exposure of a portfolio of financial assets or financial
liabilities (and only in such a hedge), amortizing using a recalculated effective
interest rate is not practicable, the adjustment shall be amortized using a
straight-line method. The adjustment shall be amortized fully by maturity of
the financial instrument or, in the case of a portfolio hedge of interest rate
risk, by expiry of the relevant repricing time period.
104. When an unrecognized firm commitment is designated as a hedged item, the
subsequent cumulative change in the fair value of the firm commitment
attributable to the hedged risk is recognized as an asset or liability with a
corresponding gain or loss recognized in surplus or deficit (see paragraph 99(b)).
The changes in the fair value of the hedging instrument are also recognized in
surplus or deficit.
105. When an entity enters into a firm commitment to acquire an asset or assume a
liability that is a hedged item in a fair value hedge, the initial carrying amount
of the asset or liability that results from the entity meeting the firm
commitment is adjusted to include the cumulative change in the fair value of
the firm commitment attributable to the hedged risk that was recognized in the
statement of financial position.
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IPSAS 29
PUBLIC SECTOR