For a Cash Flow Hedge Relating to the Purchase of a Particular

question 4

Multiple Choice

For a cash flow hedge relating to the purchase of a particular asset,foreign exchange gains and losses made on the hedging instrument:

• A) are all passed to profit or loss.
• B) are passed to equity accounts up to the time of the underlying transaction, at which time they are then included as part of the cost of the asset. After this date, they are passed directly to profit or loss.
• C) are all passed to the cost of the asset.
• D) are passed to equity accounts up to the time of the expiration of the hedging instrument, at which time they are then included as part of the cost of the asset.
• E) are passed directly to profit or loss up to the time of the underlying transaction. After this date, they are passed to equity accounts, up to the time of the expiration of the hedging instrument, at which time they are then included as part of the cost of the asset.

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Definitions:

Babble

The sounds, syllables, and simple words made by infants and young children as they learn to speak, a normal part of language development.

Age

A measure of time that an individual or object has existed from its origin to the present.

Months

Units of time in the Gregorian calendar, approximately 30 to 31 days long, used to measure longer periods of time than days and weeks.

Pinna

The visible part of the ear that is outside the head, involved in collecting sound waves and directing them into the auditory canal.