Oanda corporation Revision 5

Forex Hedge Accounting Treatment  

OANDA’s FXConsulting 

 

for Corporations

   

11 

 

The benefit of designating the hedge for special accounting treatment is removing the volatility on the 

income statement, since effective portion of the forex hedge impacts earnings when the hedged item 

impacts earnings.  The disadvantage of designating the hedge for special accounting treatment is the 

extra effort required for documentation, testing, and managing the information when the hedged item 

impacts earning in order for the designated forex hedge to impact earnings at the same time.  Both 

designated and non-designated forex hedges reduce potential loss from fluctuations in foreign exchange 

rates over time.