Unformatted text preview: assets and liabilities on the balance sheet or to specific firm commitments
or forecasted transactions. Hedge effectiveness is assessed based on the degree to which the cash flows
from the derivative contracts are expected to offset the cash flows of the underlying position or transaction
being hedged. At the time of inception of the hedge and on an ongoing basis, the Company assesses
whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in
fair values or cash flows of hedged items.
Derivative contracts that have been designated as cash flow hedges have been entered into in order to
effectively establish prices for future production of metals, to hedge exposure to exchange rate fluctuations
of foreign currency denominated settlement of capital and operating expenditures, to establish prices for
future purchases of energy or to hedge exposure to interest rate fluctuations. Unrealized gains or losses
arising from changes in the fair value of these contracts are recorded in OCI, net of tax, and are only
included in earnings when the underlying hedged transaction, identified at the contract inception, is
completed. Any ineffective portion of a hedge relationship is recognized immediately in the consolidated
statement of operations. The Company matches the realized gains or losses on contracts designated as
cash flow hedges with the hedged expenditures at the maturity of the contracts.
When derivative contracts designated as cash flow hedges have been terminated or cease to be effective
prior to maturity and no longer qualify for hedge accounting, any gains or losses recorded in OCI up until
the time the contracts do not qualify for hedge accounting, remain in OCI. Amounts recorded in OCI are
recognized in the consolidated statement of operations in the period in which the underlying hedged KINROSS GOLD 2012 ANNUAL REPORT FS17 transaction is completed. Gains or losses arising subsequent to the derivative contracts not qualifying for
hedge accounting are recognized in the consolidated statement of operations in the period in which they
For hedges that do not qualify for hedge accounting, gains or...
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- Spring '14