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Q30.

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Intermediate Accounting (Kieso)
Found in: Page 610

Short Answer

What is the purpose of a fair value hedge?

The purpose of the fair value hedge is that offset the hedged exposure with a change in the fair value of the asset.

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Step by Step Solution

Definition of fair value hedge

A fair hedge is a hedge that finds the effect of the change in the fair value of the profit and loss.

Purpose of fair value hedge

The fair value hedge is a very important part of hedge accounting. As an important part of hedge accounting, the main purpose of the fair value hedge is that it helps in setting the profit and losses and changes in the fair value.

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