IFRIC 16 - Hedges of a Net Investment in Foreign Operation
- Published in the Official Journal
- Rasmus Sommer
Some companies use hedge accounting when translating their financial statements and those of their foreign operations from the entities' respective functional currencies into the company's presentation currency for accounting presentation purposes.
IFRIC 16 clarifies whether this translation can be considered a foreign currency risk that is eligible for hedge accounting. IFRIC 16 also clarifies the situations in which the exposures that arise between different functional currencies of entities create a foreign currency risk that is eligible for hedge accounting.
EFRAG issued its comment letter in response to the Exposure Draft (IFRIC D22) in November 2007 and submitted its endorsement advice to the European Commission in November 2008.