What is hedge adjustment in SAP FS-BA-PM-AFP - Accounting for Financial Products?

SAP Term: hedge adjustment

• Component: FS-BA-PM-AFP

• Component Name: Accounting for Financial Products

• Description: Difference between the hedge fair value and the hedge amortized cost. The hedge adjustment is recorded in a separate book value component under IAS. In the fair value hedge analysis, the hedge adjustment is used to calculate the effectiveness of hedging relationships.

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• Key Concepts: 
  Hedge adjustment is a feature of the Accounting for Financial Products (AFP) component of SAP’s Financial Services Business Application (FS-BA). It allows companies to adjust their hedging positions in order to reduce their exposure to financial risks. Hedge adjustments are used to ensure that the company’s hedging strategy is in line with its risk management objectives. 
  
  How to use it: 
  Hedge adjustment can be used to adjust the hedging position of a company by changing the terms of the hedging instrument, such as the maturity date, the amount of the hedge, or the currency of the hedge. The adjustment can also be used to adjust the hedge ratio, which is the ratio between the amount of the hedge and the amount of exposure. 
  
  Tips & Tricks: 
  When making a hedge adjustment, it is important to consider all aspects of the hedging instrument, including its maturity date, amount, currency, and hedge ratio. It is also important to consider any potential tax implications that may arise from making a hedge adjustment. 
  
  Related Information: 
  For more information on hedge adjustment and other features of SAP’s Financial Services Business Application (FS-BA), please refer to SAP’s official documentation.