TREATMENT OF HEDGE ACCOUNTING DEFERRED

ICAI has deferred the applicability of its announcement on ‘Accounting for exchange differences arising on a forward exchange contract entered into, to hedge the foreign currency risk of a firm commitment or a highly probable forecast transaction’ by one year Pending the issuance of the proposed Accounting Standard on ‘Financial Instruments: Recognition and Measurement’ which is under formulation, the said announcement prescribes the accounting treatment which should be followed in respect of the exchange differences arising on the foreign exchange contracts entered into to hedge the foreign currency risks of a firm commitment or a highly probable forecast transaction.
Now this Announcement would be applicable in respect of accounting period(s) commencing on or after 1st April, 2007.