Summary of the ED proposals

• A new hedge accounting model which combines a management view that aims to use information produced internally for risk management purposes and an accounting view that  seeks to address risk management issue of the timing of recognition of gains and losses

• Look only at whether a risk component can be identified and measured, as opposed to determining what can be hedged by type of item (financial or non-financial)  

• Base qualification for hedge accounting on how entities design hedges for risk management purposes and permit hedging relationships to be adjusted without necessarily stopping and potentially restarting hedge accounting  

• Treat the time value premium of a purchased option as a cost of hedging, which will be presented in other comprehensive income (OCI)

• Extending the use of hedge accounting to net positions (to improve the link to risk management)  

• A comprehensive set of new disclosures that focus on the risks being hedged, how those risks are being managed and the effect of hedging those risks upon the primary financial statements