What is hedge reserve ?
& Why we create it ?
& what is the accounting treatment for same ?
Prem Munjal (Training) (75 Points)
10 January 2013What is hedge reserve ?
& Why we create it ?
& what is the accounting treatment for same ?
Amit Dharnia
(Trainer on Global education)
(98 Points)
Replied 16 January 2013
Dear Prem Munjal,
Hedge reserve is created for Cash Flow hedges where a decision is made by entities to protect their cash flows of future. Since it would be an unrealised money (movements in the value of hedges), it is shown through Hedge reserve.
Like any other reserve, the value of the underlying asset is increased, and a corresponding reserve is created.
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