How Should Discounts or Premiums on Forward Contracts Be Treated

question 43

Multiple Choice

How should discounts or premiums on forward contracts be treated if the derivative is hedging a foreign-currency-denominated asset?

• A)They should be carried on the balance sheet until the contract is completed.
• B)They should be included in income in the period the derivative is acquired.
• C)They should be amortized over the life of the forward contract.
• D)None of the above.

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