IAS 39 – Financial Instruments: Recognition and Measurement – Theory – 1

A forecast transaction is __________ future transaction.

Hedge effectiveness is the degree to which changes in the fair value or cash flows of the hedged item that are attributable to a hedged risk are offset by changes in the fair value or cash flows of the hedging instrument.

A hedged item is __________ that exposes the entity to risk of changes in fair value or future cash flows and is designated as being hedged.

A non-derivative financial asset or non-derivative financial liability may be designated as a hedging instrument only __________.

For hedge accounting purposes, only __________ can be designated as hedging instruments.

A hedging relationship may be designated for only a portion of the time period during which a hedging instrument remains outstanding.

Under which of the following circumstances may a single hedging instrument be designated as a hedge of more than one type of risk?

Which of the following is not true with regards to financial items designated as hedged items?