BC155 The question of basis adjustment arises when an entity hedges the future purchase of an asset or the future issue of a liability. One example is that of a US entity that expects to make a future purchase of a German machine that it will pay for in euro. The entity enters into a derivative to hedge against possible future changes in the US dollar/euro exchange rate. Such a hedge is classified as a cash flow hedge under IAS 39, with the effect that gains and losses on the hedging instrument (to the extent that the hedge is effective) are initially recognised in equity. [As a consequence of the revision of IAS 1 Presentation of Financial Statements in 2007 such gains and losses are recognised in other comprehensive income.] The question the Board considered is what the acco
…Version date: 26 February 2020 - onwards
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