Although there are many aspects to be considered for a full understanding of hedge accounting as an exceptional rule to fair value accounting, we focus on: what rationale exists behind the dichotomy of fair value and cash flow hedges; and whether it is justifiable on a solid theoretical foundation of accounting measurement.Furthermore, in order to fully understand the theoretical as well as practical significance of hedge accounting, we should broaden our perspective beyond the scope of a usual measurement-oriented argument in the accounting literature. To be more concrete, we will argue that reexamining the meaning of being risk-free from a viewpoint of multiperiod dynamic optimization is absolutely necessary, albeit not sufficient, to comprehend the essence of hedging.