How Should Changes in the Fair Value of Derivatives Be

question 14

Multiple Choice

How should changes in the fair value of derivatives be reported in a government's financial statements?

• A) Gains or losses in the government-wide statement of activities.
• B) Losses but not gains in general fund statements of revenues, expenditures, and changes in fund balance.
• C) Gains or losses in the government-wide statement of activities, except for derivatives that qualify as hedges.
• D) Only disclosed in the notes.

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Definitions:

Demand Note

A type of loan agreement where the loan can be called for repayment by the lender at any time.

Maximum Amount

The highest possible quantity or value that can be reached or allowed.

Commercial Banks

Financial institutions that provide various financial services, including deposit accounts, loans, and currency exchange.

Credit Market

A financial market where borrowers can obtain funds from investors, encompassing all transactions involving lending and borrowing.