In a Hedge of a Forecasted Transaction, Gains or Losses

question 8

Multiple Choice

In a hedge of a forecasted transaction, gains or losses on derivative instruments prior to the occurrence of the actual transaction should be reported as

• A)​a component of stockholders' equity.
• B)​a component of other comprehensive income.
• C)​an extraordinary item.
• D)​income from continuing operations.

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Definitions:

Corrected

Processed or amended to rectify errors or inaccuracies.

Risk of Loss

The legal responsibility regarding who bears the financial burden if goods are damaged or lost during transaction or shipment.

Destroyed

To have been made unusable or ruined beyond repair.

Performance

In contract law, performance refers to the fulfillment of a contractual duty, as promised in a contract.