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Tuesday 02 June 2020

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Financial Instruments: Recognition and Measurement

Financial Instruments: Recognition and Measurement - Eligible Hedged Items


This project has been completed. The IASB issued Eligible Hedged Items (Amendment to IAS 39 Financial Instruments: Recognition and Measurement) on 31July 2008.

Entities shall apply the amendment retrospectively for annual periods beginning on or after 1 July 2009. Earlier application is permitted.



The full text of the Amendment to IAS 39 is available for eIFRS subscribers or printed copies will be available to purchase from our online shop soon.    

Reason for the amendment


The International Financial Reporting Interpretations Committee (IFRIC) received submissions requesting guidance on what can be designated as a hedged portion under IAS 39. For example, the IFRIC was asked whether inflation could be designated as a hedged portion of an interest-bearing asset or liability.

Rather than dealing with these submissions case by case, the IFRIC attempted to develop a principle that could be used as guidance on what can be designated as a hedged portion under IAS 39. However, the IFRIC concluded that the requirements of IAS 39 in this area were unclear.

At its meeting in October 2006, the IASB acknowledged that additional guidance on the designation of hedged items was required.

The amendment clarifies how the principles that determine whether a hedged risk or portion of cash flows is eligible for designation should be applied in particular situations.

Scope of the amendment


The amendment addresses two particular situations:

  • the designation of a one-sided risk in a hedged item
  • the designation of inflation in particular situations

The amendment applies to hedging relationships in the scope of IAS 39.

Effect of the amendment

Because of its limited scope, the amendment is expected to affect only those entities that designate hedging relationships in the two situations it addresses. The amendment is expected to reduce diversity in practice that exists, or is likely to occur, in those two situations.

Is this project part of the Memorandum of Understanding (MoU)?

The MoU sets out a Roadmap of Convergence between IFRSs and US GAAP 2006 - 2008. Click here for more information on the MoU.

This project does not form part of the MoU. 

Related information

  • Download a pdf version of the full project summary
  • Click here to view the Exposure Draft and comment letters

Project contacts

Gavin Francis 
Director of Capital Markets 


Carol Wong 
Technical Associate