Under IFRS, which of the following statements about hedging a foreign currency risk of an accepted purchase order is true?
A)It must be accounted for using a fair-value hedge.
B)It must be accounted for using a cash-flow hedge.
C)It can be accounted for using either a fair-value hedge or a cash-flow hedge.
D)It is not eligible for hedge accounting until it becomes an accounts payable.

Question

Quizplus · Accepted Answer

Under IFRS, a hedging of a foreign currency risk of an accepted purchase order can be accounted for using either a fair-value hedge or a cash-flow hedge. The choice of hedge accounting depends on the nature of the risk being hedged and the hedging instrument being used. Therefore, both options are available for this scenario.

Under IFRS, Which of the Following Statements About Hedging a Foreign