Deloitte
Accounting Research Tool
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Chapter 3 — Fair Value Hedges

3.3 Nonfinancial Assets and Liabilities

3.3 Nonfinancial Assets and Liabilities

As discussed in Section 2.3.2, in a fair value hedge that involves nonfinancial assets or liabilities (including nonfinancial firm commitments with no financial components), an entity can only designate a derivative instrument to hedge the overall changes in fair value. Component hedging is not available for fair value hedges of nonfinancial items. However, an entity is permitted to hedge certain risks in cash flow hedges of the forecasted purchases and sales of nonfinancial assets, so such hedges are much more common than fair value hedges of existing nonfinancial assets or liabilities.