hedge
A hedge or hedgerow is a line of closely spaced shrubs and sometimes trees, planted and trained to form a barrier or to mark the boundary of an area, such as between neighbouring properties. Hedges that are used to separate a road from adjoin ...
of the exposure to the variability of
cash flow
A cash flow is a real or virtual movement of money:
*a cash flow in its narrow sense is a payment (in a currency), especially from one central bank account to another; the term 'cash flow' is mostly used to describe payments that are expected ...
that
# is attributable to a particular risk associated with a recognized asset or liability. Such as all or some future interest payments on variable rate debt or a highly probable forecast transaction and
# could affect profit or loss (
IAS 39
IAS 39: Financial Instruments: Recognition and Measurement was an international accounting standard which outlined the requirements for the recognition and measurement of financial assets, financial liabilities, and some contracts to buy or sell n ...
, ยง86b)
This is mostly an accountant's definition.
See also
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Hedge accounting
Hedge accounting is an accountancy practice, the aim of which is to provide an offset to the mark-to-market movement of the derivative in the profit and loss account.
There are two types of hedge recognized. For a fair value hedge, the offset ...
*
Accumulated other comprehensive income
Note: Reference cited below, FAS130, remains the most current accounting literature in the United States on this topic.
In 1997 the United States Financial Accounting Standards Board issued Statement on Financial Accounting Standards No. 130 ent ...