The treatment that lets a hedge and the thing it hedges be reported together. An economic hedge that fails the tests leaves reported earnings moving while the exposure is actually covered — a real cost, paid in explanation rather than in cash.
Where Hedge accounting is explained in depth
The definition above is the short version. These pages put it to work, in the order they use it most:
Information and education only. Every page, figure and
calculator on this site exists to explain how financial instruments work. Nothing here is
investment, tax or legal advice, a recommendation, or a valuation you can rely on.Full disclaimer