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Hedging Financial Instruments | 12 Months Ended
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Dec. 31, 2020
Disclosure Of Detailed Information About Hedging Instruments [Abstract] |
Hedging Financial Instruments |
21. | HEDGING FINANCIAL INSTRUMENTS
Chunghwa’s hedge strategy is to enter into forward exchange contracts - buy to avoid its foreign currency exposure to certain foreign currency denominated equipment payments in the following six months. In addition, Chunghwa’s management considers the market condition to determine the hedge ratio and enters into forward exchange contracts with the banks to avoid the foreign currency risk. Chunghwa signed equipment purchase contracts with suppliers and entered into forward exchange contracts to avoid foreign currency risk exposure to Euro-denominated purchase commitments. Those forward exchange contracts were designated as cash flow hedges. When forecast purchases actually take place, basis adjustments are made to the initial carrying amounts of hedged items. For the hedges of highly probable forecast sales and purchases, as the critical terms (i.e. the notional amount, life and underlying) of the forward foreign exchange contracts and their corresponding hedged items are the same, the Company performs a qualitative assessment of effectiveness and it is expected that the value of the forward contracts and the value of the corresponding hedged items will systematically change in opposite direction in response to movements in the underlying exchange rates. The main source of hedge ineffectiveness in these hedging relationships is the effect of credit risks of the Company and the counterparty on the fair value of the forward exchange contracts. Such credit risks do not impact the fair value of the hedged item attributable to changes in foreign exchange rates. No other sources of ineffectiveness emerged from these hedging relationships. The following tables summarized the information relating to the hedges for foreign currency risk. December 31, 2018
|  |  |  | Notional |  |  |  | Forward |  |  | Line Item in |  | Carrying Amount |  |  | Change in Fair Values of Hedging Instruments Used for Calculating Hedge |
Hedging Instruments |  | Currency |  | Amount |  | Maturity |  | Rate |  |  | Balance Sheet |  | Asset |  |  | Liability |  |  | Ineffectiveness |
|  |  |  | (In Millions) |  |  |  |  |  |  |  |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  |  |  |  |  |  |  |  |  |  |  |  |  | (In Millions) |
Cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forecast purchases - forward exchange contracts |  | NT$/EUR |  | NT$ 172/ EUR 5 |  | 2019.03 |  | $ | 34.98 |  |  | Hedging financial assets (liabilities) |  | $ | 1 |  |  | $ | — |  |  | $ | 2 |
|  | Change in Value of Hedged Item Used for |  |  | Accumulated Gain or Loss on Hedging Instruments in Other Equity |
Hedged Items |  | Calculating Hedge Ineffectiveness |  |  | Continuing Hedges |  |  | Hedge Accounting No Longer Applied |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  |  |  |  |  | (In Millions) |  |  |  |  |
Cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |
Forecast equipment purchases |  | $ | (2 | ) |  | $ | 1 |  |  | $ | — |
December 31, 2019
|  |  |  | Notional |  |  |  | Forward |  |  | Line Item in |  | Carrying Amount |  |  | Change in Fair Values of Hedging Instruments Used for Calculating Hedge |
Hedging Instruments |  | Currency |  | Amount |  | Maturity |  | Rate |  |  | Balance Sheet |  | Asset |  |  | Liability |  |  | Ineffectiveness |
|  |  |  | (In Millions) |  |  |  |  |  |  |  |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  |  |  |  |  |  |  |  |  |  |  |  |  | (In Millions) |
Cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forecast purchases - forward exchange contracts |  | NT$/EUR |  | NT$ 84/EUR 2 |  | 2020.03 |  | $ | 33.66 |  |  | Hedging financial assets (liabilities) |  | $ | — |  |  | $ | — |  |  | $ | (1 | )
|  | Change in Value of Hedged Item Used for |  |  | Accumulated Gain or Loss on Hedging Instruments in Other Equity |
Hedged Items |  | Calculating Hedge Ineffectiveness |  |  | Continuing Hedges |  |  | Hedge Accounting No Longer Applied |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  |  |  |  |  | (In Millions) |  |  |  |  |
Cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |
Forecast equipment purchases |  | $ | 1 |  |  | $ | — |  |  | $ | — |
December 31, 2020
|  |  |  | Notional |  |  |  | Forward |  |  | Line Item in |  | Carrying Amount |  |  | Change in Fair Values of Hedging Instruments Used for Calculating Hedge |
Hedging Instruments |  | Currency |  | Amount |  | Maturity |  | Rate |  |  | Balance Sheet |  | Asset |  |  | Liability |  |  | Ineffectiveness |
|  |  |  | (In Millions) |  |  |  |  |  |  |  |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  |  |  |  |  |  |  |  |  |  |  |  |  | (In Millions) |
Cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forecast purchases - forward exchange contracts |  | NT$/EUR |  | NT$ 201/ EUR 6 |  | 2021.03 |  | $ | 34.45 |  |  | Hedging financial assets (liabilities) |  | $ | 2 |  |  | $ | — |  |  | $ | 2 |
|  | Change in Value of Hedged Item Used for |  |  | Accumulated Gain or Loss on Hedging Instruments in Other Equity |
Hedged Items |  | Calculating Hedge Ineffectiveness |  |  | Continuing Hedges |  |  | Hedge Accounting No Longer Applied |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  |  |  |  |  | (In Millions) |  |  |  |  |
Cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |
Forecast equipment purchases |  | $ | (2 | ) |  | $ | 2 |  |  | $ | — |
2018
|  | Comprehensive Income |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Reclassification from Equity to Profit or Loss and the Adjusted Line Item |
|  | Hedging Gain or Loss |  |  | Amount of Hedge Ineffectiveness |  |  | Line Item in Which Hedge |  |  | Amount Reclassified to P/L and |  |  | Due to Hedged Future Cash Flows No |
Hedge |  | Recognized |  |  | Recognized in |  |  | Ineffectiveness |  |  | the Adjusted |  |  | Longer Expected |
Transaction |  | in OCI |  |  | Profit or Loss |  |  | is Included |  |  | Line Item |  |  | to Occur |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Millions) |
Cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forecast equipment purchases |  | $ | 2 |  |  | $ | — |  |  |  | — |  |  | $ | (4 | ) |  | $ | — |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Construction in progress and equipment to be accepted |  |  | Other gains and losses |
2019
|  | Comprehensive Income |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Reclassification from Equity to Profit or Loss and the Adjusted Line Item |
|  | Hedging Gain or Loss |  |  | Amount of Hedge Ineffectiveness |  |  | Line Item in Which Hedge |  |  | Amount Reclassified to P/L and |  |  | Due to Hedged Future Cash Flows No |
Hedge |  | Recognized |  |  | Recognized in |  |  | Ineffectiveness |  |  | the Adjusted |  |  | Longer Expected |
Transaction |  | in OCI |  |  | Profit or Loss |  |  | is Included |  |  | Line Item |  |  | to Occur |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Millions) |
Cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forecast equipment purchases |  | $ | (1 | ) |  | $ | — |  |  |  | — |  |  | $ | (2 | ) |  | $ | — |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Construction in progress and equipment to be accepted |  |  | Other gains and losses |
2020
|  | Comprehensive Income |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Reclassification from Equity to Profit or Loss and the Adjusted Line Item |
|  | Hedging Gain or Loss |  |  | Amount of Hedge Ineffectiveness |  |  | Line Item in Which Hedge |  |  | Amount Reclassified to P/L and |  |  | Due to Hedged Future Cash Flows No |
Hedge |  | Recognized |  |  | Recognized in |  |  | Ineffectiveness |  |  | the Adjusted |  |  | Longer Expected |
Transaction |  | in OCI |  |  | Profit or Loss |  |  | is Included |  |  | Line Item |  |  | to Occur |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Millions) |
Cash flow hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forecast equipment purchases |  | $ | 2 |  |  | $ | — |  |  |  | — |  |  | $ | 21 |  |  | $ | — |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Construction in progress and equipment to be accepted |  |  | Other gains and losses |

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