Forex Hedge Accounting Treatment
OANDA’s FXConsulting
for Corporations
16
need to assess the counterparty risk from the hedge provider at each reporting date.
Conclusion
Accounting standards for foreign exchange hedging cover a variety of issues not addressed in this
document. For example, consider a company’s need to hedge vs. the fair market valuation needs for
fixed rate foreign currency debt or floating rate foreign currency debt. Other items not discussed are
intercompany transactions, foreign currency available-for-sale securities, and a large variety of other
real-world transactions.
The flexibility allowed by accounting standards can be a challenge to determine a company’s hedging
choices. As a result, corporate forex hedging can be very complex and a tricky area for accountants.
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