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Hedge management.

Former Member
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339

Hi Expert,

1. Can anybody tell me what is the meaning and what is the use of Dedesignation and Dissolution in Hedge Management. I have read help SAP Documentation but not able to figure out the actual use.

2. if possible please tell me the whole cycle of hedge management. i have created the Hedge plan, Exposure, Hedge item and Hedge relationship. My forex deal and exposure has been attached. now what is the process next how should i complete the process.

Please help and give your input ...

Regards

Gaurav

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Answers (2)

Answers (2)

Former Member
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Dedesignation is concern with Hedge relationship, In Dedesignation, we disolve the relationship between Hedge Item and Hedge Insturment when you Hedge is not effective.

Disolution of Hedge Accounting is done at the maturity of Hedge, where OCI balance is transferred to P & L,

Regards

Narinder Pal Verma

+91-9818882409

Former Member
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Hi ,

the dissolving or dedesignation means ending the relation ship between hedged item and underlying derivative financial instrument , the difference is in case of dissolving any Open OCI balances are cleared against the P&L and in case of designation it will not happen ,

the basic process depends upon company method of hedging basic process creation of hedge plan THMEX , add the exposure and creation of hedged item and creation of hedge relationship betwen hedged item and underlying instrument , Test effectiveness on the key date THM80 ( Retrorespective testing) , then determinaton of NPV of the underlying instrument and tpm1 valuation on key date ( depensing on the method cash flow or firvalue or net investment) the valuation will posting according to the method mentioned above .

Former Member
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Mahesh,

I have been reading your replies to questions related to Hedging. You seem to know a lot about Hedge Management. Can you please recommend some good book which explains the various accounting rules (US GAAP) relating to Hedging? I am looking for a generic book on Hedging, Hedge Management and Hedge Accounting and not necessarily SAP Hedge Management.

Appreciate your help.

Kalyan

Edited by: Kalyan on Feb 12, 2012 8:34 AM