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What can be your hedged itemWith regard to non-financial items IAS 39 allows hedging only a non-financial item in its entirety and not just some risk component of it. IFRS 9 allows hedging a risk component of a non-financial item if that component is separately identifiable and measurable.
ias 39 hedge accounting
IAS 39 requires hedge effectiveness to be assessed both prospectively and retrospectively. … All hedge ineffectiveness is recognised immediately in profit or loss (including ineffectiveness within the 80% to 125% window).
ifrs 9 summary
IFRS 9 is effective for annual periods beginning on or after 1 January 2018 with early application permitted. IFRS 9 specifies how an entity should classify and measure financial assets, financial liabilities, and some contracts to buy or sell non-financial items.
hedge effectiveness ifrs 9
Hedge effectiveness is defined as the extent to which changes in the fair value or cash flows of the hedging instrument offset changes in the fair value or cash flows of the hedged item. IFRS 9 requires the existence of an economic relationship between the hedged item and the hedging instrument.