AASB 1 First-time Adoption of Australian Accounting Standards B4-B6: Hedge accounting at transition: carry derivatives at fair value, remove deferred hedging gains and losses, reflect only relationships that qualify under AASB 9, and apply hedge accounting prospectively

What does B4-B6 require?

At the transition date every derivative is measured at fair value and any deferred gains and losses on derivatives that the previous GAAP carried as assets or liabilities are eliminated. The opening position must not show a hedging relationship that would not qualify under AASB 9, such as a hedge using a written option, a net position hedge of interest rate risk in a group, or a hedge of an asset carried at cost. A transaction designated as a hedge before the transition date under the previous GAAP that does qualify can continue only if the designation and documentation were complete at that date; otherwise hedge accounting stops under the AASB 9 discontinuation rules. Hedge accounting is applied prospectively from the transition date.