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■ CHAPTER 7 Hedge Accounting I (Single Currency)

A Caveat There is only one U.S. GAAP (Generally Accepted Accounting Principles) and one international GAAP called IFRS (International Financial Reporting Standards). In reality, however, corporate adoption of hedge accounting is an override of GAAP; for a company to apply the special guides provided by hedge accounting and be able to smooth earnings is a privilege; it is neither a right nor an obligation. An entity becomes eligible to adopt hedge accounting if it meets a very specific set of rules; that is, the management could opt to take or leave this special accounting treatment. These choices are not available in any other accounting standard.