A case study on hedge accounting and its applicability in Turkey

In general risk is possible events or circumstances that may arise in the future and adversely affect in the businesses operating cycles. In 1972, financial risks have come to the forefront with the end of the Bretton Woods agreement and the transition to floating exchange rate system. Especially with the globalization, developments in international markets have caused these risks to increase and diversify scope. With the increasing risks that businesses are exposed to day by day and adversely affecting their operational results, the need to manage these risks has emerged and has become even more important day by day. Nowadays derivative financial instruments are one of the most widely used means for risk management. The diversification of these means in accordance with every need increases the use of these instruments within the scope of risk management. However, with the increase in the use of derivative financial instruments, it has raised the question of how these financial instruments should be reported in the financial statements. In this study, risk management has handle and the use of derivative financial instruments within this scope has explained in accordance with the relevant standards and revealed how to report in accordance with International Accounting and Financial Reporting Standards (IAS / IFRS). In addition, in the scope of application part of this study of the process by giving the place a thorough study of a company incorporated in Turkey has intended to be scrutinized and guidanced on behalf of different companies.