Cash flow hedge: a hedge of the exposure o variability in cash flows that is attributable to a particu- lar risk associated with all, or a component of, a recognised asset or liability (Such as all or some fu- ture interest payments on variable-rate debt) or a highly probable forecast transaction, and could af- fect profit or loss. [IFRS 9 paragraph 6.5.2(b)] Fora cash flow hedge the cash flow hedge reserve in equity is adjusted to the lower of the following (in absolute amounts): ‘the cumulative gain or loss on the hedging instrument ‘rom inception of the hedge; and ‘the cumulative change in fair value of the hedged item from inception of the hedge. “The portion ofthe gain or loss on the edging instrument that is determined to be an BHEGIVEIHEGIES Regains and any remaining gain or loss is hedge ineffectiveness thats recognisectin prof, Ifa hedged forecast transaction subsequently resutts in the recognition of a non-financial item or be- comes a firm commitment for which fair value hedge accounting is applied, the amount that has been accumulated in the cash flow hedge reserve is removed and included directly in the initial cost or other carrying amount of the asset or the liability. In other cases the amount that has been accumulated in the cash flow hedge reserve is reclassified to profit or loss in the same period(s) as the hedged cash flows affect profit or loss. [IFRS 9 paragraph 6.5.11] ‘When an entity discontinues hedge accounting for a cash flow hedge, if the hedged future cash flows are still expected to occur, the amount that has been accumulated in the cash flow hedge reserve re- mains there until the future cash flows occur. if the hedged future cash flows are no longer expected to. occur, that amount is immediately reciassified to profit or loss [IFRS 9 paragraph 6.5.12] Anhedge of the foreign currency risk of a firm commitment may be accounted for as a ‘air value hedge or a cash flow hedge. [IFRS 9 paragraph 6.5.4]