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Under Ind AS 101, HEDGE ACCOUNTING at the date of transition requires the entity to:
ADiscontinue all hedge accounting on transition and apply Ind AS 109 only prospectively
BMeasure all derivatives at fair value AND eliminate any deferred losses/gains on derivatives previously reported as assets/liabilities — and reflect a hedging relationship in the opening Ind AS BS only if both (i) the relationship is a type that qualifies for Ind AS 109 hedge accounting AND (ii) was designated under previous GAAP
CCarry forward all hedge accounting positions from previous GAAP unchanged
DRe-designate all hedge relationships on transition date with new effectiveness testing
Answer & Solution
Correct answer: B. Measure all derivatives at fair value AND eliminate any deferred losses/gains on derivatives previously reported as assets/liabilities — and reflect a hedging relationship in the opening Ind AS BS only if both (i) the relationship is a type that qualifies for Ind AS 109 hedge accounting AND (ii) was designated under previous GAAP
Mandatory exception (hedge accounting) — at transition: derivatives at FV, deferred derivative gains/losses eliminated, opening Ind AS BS reflects hedging only when type qualifies AND was previously designated. Once reflected, if the qualifying conditions (documentation, effectiveness) aren't subsequently met under Ind AS 109, hedge accounting is discontinued per Ind AS 109. Retrospective DESIGNATION of new hedge relationships at transition is PROHIBITED.
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