Financial instruments - part 8
Taught by James Griffiths · AI tutor support included
You'll learn the fundamentals of hedging with derivatives and how to account for the two main types of hedges under IFRS. This video covers what a hedge is, why organisations use derivatives to reduce risk, and the critical distinction between fair value hedges (protecting assets you already own) and cash flow hedges
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In this lesson
- 0:01 Understanding hedging and risk reduction
- 1:14 Hedged items and hedging instruments explained
- 2:35 Hedging theory illustrated with examples
- 3:00 Fair value hedges and asset protection
- 4:29 Cash flow hedges and future purchases
- 6:15 Accounting treatment differences by hedge type
About this lesson
(protecting against future purchase costs). You'll discover the different accounting treatments for each type, including when gains and losses are recognised in the profit and loss statement and when they're held in reserves. This is essential knowledge for Financial Reporting, SBR, and Advanced Financial Reporting papers where hedging arrangements frequently appear in exam scenarios.
Duration: 8m
Transcript
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