Some ideas as to how a company might apply the aspects of the new accounting standards addressing hedges are pesented. Hedge accounting is optional. Because the accounting consequences may differ and certain hedging relationships that previously qualified for hedge accounting in accordance with Accounting Guideline AcG-13, Hedging Relationships, will no longer qualify, a company may need to reevaluate the instances in which it wishes to use hedge accounting. Having made an evaluation of the possibilities, a firm may decide not to adopt hedge accounting or to do so only in limited circumstances. However, if it does choose to, it must do so within the parameters laid out in the new standards. Having decided to adopt hedge accounting, a hedging relationship must be designated and documented. Even though the implementation date seems some way off, companies should consider how to apply these new standards as soon as possible.

Hedging