The requirements for applying hedge accounting to foreign currency exposures are consistent with the general concepts outlined in ASC 815. However, because of the unique nature of a foreign currency exposure and its interaction with the measurement and translation guidance in ASC 830, there are a number of special considerations related to foreign currency hedges that affect the eligible hedged items and hedging instruments as well as the mechanics and application of hedge accounting.
While ASC 815-20-25-61 discusses hedging forecasted borrowings for foreign currency risk, note that the forecasted issuance of foreign-currency-denominated debt does not give rise to a foreign currency risk related to the principal amount of the debt before it is issued. There is no earnings exposure from the potential changes in cash flows attributable changes in foreign currency exchange rates for the principal amount of debt in a forecasted issuance of foreign-currency-denominated debt. However, forecasted interest payments related to the forecasted issuance of foreign-currency-denominated debt may be hedged for foreign currency risk. An entity may hedge the foreign currency risk related to the principal, interest payments, or both for recognized foreign-currency-denominated debt.