What is ineffective hedging relationship in SAP FS-BA-PM-AFP - Accounting for Financial Products?

SAP Term: ineffective hedging relationship

• Component: FS-BA-PM-AFP

• Component Name: Accounting for Financial Products

• Description: A hedging relationship for which the effectiveness of the hedge is too small, and that has to be dissolved.

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• Key Concepts: 
  An ineffective hedging relationship is a situation in which the hedging instrument does not effectively hedge the risk of the hedged item. This can occur when the hedging instrument does not move in the same direction as the hedged item, or when the hedging instrument does not move in proportion to the hedged item. In this case, the hedging relationship is considered ineffective and must be reported as such. 
  
  How to use it: 
  In SAP Financial Services - Bank Accounting - Payment Management - Accounting for Financial Products (FS-BA-PM-AFP), an ineffective hedging relationship is reported using a special transaction type. This transaction type is used to record the difference between the expected and actual results of the hedging relationship. The transaction type also records any gains or losses that may have occurred due to the ineffective hedging relationship. 
  
  Tips & Tricks: 
  When recording an ineffective hedging relationship in SAP FS-BA-PM-AFP, it is important to ensure that all relevant information is included in the transaction type. This includes details such as the date of the transaction, the amount of gain or loss, and any other relevant information. 
  
  Related Information: 
  For more information on how to record an ineffective hedging relationship in SAP FS-BA-PM-AFP, please refer to SAP Help documentation. Additionally, there are several online resources available that provide further guidance on this topic.