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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Definitions:

Lamellated Corpuscle

A nerve ending found in the skin and other tissues, sensitive to pressure and vibration.

Tactile Corpuscle

A type of mechanoreceptor found in the dermal papillae of the skin, particularly sensitive to light touch and vibrations.

Merkel Cells

Specialized skin cells that function as mechanoreceptors for touch.

Conduction Deafness

A type of hearing loss that occurs when there is a problem conducting sound waves anywhere along the route through the outer ear, tympanic membrane (eardrum), or middle ear.