Which of the Following Statements Is True About Hedge Accounting

question 19

Multiple Choice

Which of the following statements is true about hedge accounting under U.S. GAAP?

• A) Companies may choose whether to account for derivatives as cash flow hedges or fair value hedges.
• B) If a derivative qualifies as a cash flow hedge, the hedging instrument is adjusted to fair value on each balance sheet date.
• C) If a derivative is elected by the company not to be designated as a cash flow hedge, it must be accounted for as such.
• D) Hedge accounting is only advantageous when a foreign currency depreciates between the transaction date and the payment date.

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