CERTYNEX IFRS ACADEMY

Ardenne, whose functional currency is the euro, has a dollar borrowing (a monetary item). Case data: it designated the borrowing as the hedging instrument of the foreign currency risk on future dollar purchases, in a cash flow hedge that meets the IFRS 9 conditions; at the closing date, the hedge is fully effective. How is the exchange difference on the borrowing treated?

In profit or loss for the period, like any exchange difference on a monetary item, the hedge designation having no effect.

Under IFRS 9 hedge accounting, to which IAS 21 refers: the effective portion goes first to other comprehensive income.

Under hedging rules specific to IAS 21, which require the exchange difference to be deferred until the borrowing is repaid.

It is not recognised: a borrowing designated as a hedging instrument is no longer translated at the closing rate.