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CFM27100 | Accounting for corporate finance: hedging: non-qualifying hedged items:

From HM Revenue & Customs · Corporate Finance Manual

This guidance applies to companies which apply IFRS, New UK GAAP or FRS 26.

Items which cannot be designated hedged items

Certain items cannot be designated as hedged items.

  • An entity’s own equity instruments;

  • Derivatives (except purchased options as the hedged item in a fair value hedge where a written option is the hedging instrument);

  • A net position (e.g. the net of all fixed rate assets and fixed rate liabilities), rather than a specific item;

  • General business risks - for example a firm commitment to acquire a business in a business combination cannot be a hedged item, except for foreign exchange risk, because these other risks cannot be specifically identified and measured.