Financial instruments accounting requires classification, expected credit loss measurement, derecognition analysis, and qualifying hedge accounting based on risk management.

Ind AS 109 governs recognition, classification, measurement, impairment, derecognition and hedge accounting for financial instruments. Financial assets are classified at amortised cost, fair value through other comprehensive income, or fair value through profit or loss based on the business model and contractual cash-flow characteristics. Derecognition depends on expiry or transfer of cash-flow rights, transfer of risks and rewards, and retained control. Expected-credit-loss allowances apply to relevant assets, receivables, commitments and guarantees. Hedge accounting requires qualifying instruments, eligible hedged items, formal documentation, an economic relationship and an appropriate hedge ratio.

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