Which of the Following Statements Does Not Accurately Describe the Accounting

question 17

Multiple Choice

Which of the following statements does not accurately describe the accounting for derivatives?

• A)The holding gain resulting from a fair value hedge that qualifies for hedge accounting is recognized in net income along with the offsetting loss on the hedged item.
• B)The holding loss resulting from a cash flow hedge that qualifies for hedge accounting is recognized in net income during the year of the loss.
• C)Management must be able to describe its hedging strategy in order to meet the GAAP criteria to qualify for hedge accounting.
• D)Derivatives that fail to meet the GAAP criteria for hedge accounting are accounted for as speculative investments.

---

Definitions:

External Locus

The belief that one's outcomes in life are determined by external forces or environment rather than personal actions.

Introvert Temperament

A personality trait characterized by a focus on internal feelings rather than external sources of stimulation, often preferring solitary or calm environments.

Middle-Class Values

A set of social and cultural beliefs often associated with the middle class, such as the importance of education, hard work, responsibility, and the pursuit of happiness.

Terminal Values

Fundamental beliefs or goals that an individual strives to achieve over a lifetime.