On 1 January 20x1, INV Ltd acquired $1,000,000 of equity instrument for which it has elected to present changes in fair value in other comprehensive income. On the same day, INV Ltd purchased a put option on $1,000,000 of the same equity instrument for the purpose of risk management to hedge the price risk associated with the investment. If INV Ltd wishes to apply hedge accounting, what is the type of hedge accounting rule that shall be applied? 

 INV Ltd does not need to apply hedge accounting as it is a natural hedge. 

Fair value hedge only. 

Cash flow hedge only. 

Hedge of net investment in foreign operation only. 

None of the listed choices.

Answer rating: 100% (QA)

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