alleryStart learning →What is the main aim of hedge accounting?
ATo state every asset at its historical cost
BTo remove all derivatives from the balance sheet
CTo raise the tax charged on derivative gains
DTo offset the derivative's mark-to-market movement
Answer & Solution
Correct answer: D. To offset the derivative's mark-to-market movement
Hedge accounting matches the gain or loss on the hedging derivative with the loss or gain on the hedged exposure so that profit or loss is less volatile.
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