can someone please explain me about hedging account in simple words.
thanks,
Aswin Kumar
If investors purchase a security that comprises a high level of risk, they may accompany the purchase with an opposing item (usually a derivative, such as an option or future contract) referred to as a hedge. This hedge experiences gains in value when the corresponding security sustains losses. Under traditional accounting practices, a security and its hedge are treated as separate components when priced. Hedge accounting treats them as a single accounting entry that reflects the combined market values of the security and the hedge.
Details refer: accounting-guides/pwc_derivatives
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