BC6.76 Hedge accounting is an exception to the normal recognition and measurement requirements in IFRS. For example, the hedge accounting guidance in IAS 39 permitted:

(a) the recognition of items that would otherwise have not been recognised (for example, a firm commitment);

(b) the measurement of an item on a basis that is different from the measurement basis that is normally required (for example, adjusting the measurement of a hedged item in a fair value hedge); and

(c) the deferral of the changes in the fair value of a hedging instrument for a cash flow hedge in other comprehensive income. Such changes in fair value would otherwise have been recognised in profit or loss (for example, the hedging of a highly probable forecast transaction).

BC6.77 The IASB noted that, although hedge accounting was an exception from normal accounting requirements, in many situations the information that resulted from applying those normal requirements without using hedge accounting either did not provide useful information or omitted important information. Hence, the IASB concluded that hedge accounting should be retained.

BC6.78 In the IASB’s view, a consistent hedge accounting model requires an objective that describes when and how an entity should:

(a) override the general recognition and measurement requirements in IFRS (ie when and how an entity should apply hedge accounting); and