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This chapter addresses relevant considerations in the application of hedge accounting to nonfinancial assets. The chapter focuses on the unique aspects and requirements of hedging risks associated with nonfinancial items, including:
  • Eligibility criteria, including eligible risks, transactions, and hedging instruments
  • Hedging the contractually specified component of a forecasted transaction
  • Accounting for fair value and cash flow hedges of nonfinancial assets, forecasted purchases/sales of nonfinancial assets, and nonfinancial assets in inventory

The concepts within this chapter should be applied in conjunction with information in other chapters in this guide, including the overview of hedge accounting and documentation requirements for all hedges (DH 5), foreign currency and intercompany hedges (DH 8), effectiveness assessments (DH 9), and discontinuance of hedge accounting (DH 10).

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