New UK GAAP changes to financial instruments and hedge accounting

The Financial Reporting Council has issued amendments to new UK GAAP to improve the accounting for certain financial transactions

The FRC states that this will 'improve ease of use of the standards and reduce the cost of compliance'.

The amendments have the same effective date, 1 January 2015, as FRS 102. They 'relate to financial instruments:

  • updating the requirements on hedge accounting, making hedge accounting more readily available to entities where it is consistent with their risk management processes;
  • relaxing the conditions for regarding financial instruments as ‘basic’, with the effect that more financial instruments will be measured by reference to cost rather than fair value'.

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