Which of the Following Is Not a Disclosure for Derivatives

question 76

Multiple Choice

Which of the following is not a disclosure for derivatives required under SFAS No.133?

• A) Firms must describe their risk management strategy and how particular derivatives help accomplish their hedging objectives.
• B) For fair value and cash flow hedges, firms must disclose the net gain or loss recognized in earnings resulting from the hedges' ineffectiveness and the line item on the income statement that includes this net gain or loss.
• C) For cash flow hedges, firms must describe the transactions or events that will result in reclassifying gains and losses from other comprehensive income to net income
• And the estimated amount of such reclassifications during the next 12 months.
• D) The specifics of a model that simulates with a 95 percent or other confidence level the minimum, maximum, or average amount of loss that a firm would incur.

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Definitions:

Subcontracting

Refers to the practice where a business contracts out part or all of its production or service processes to external companies.

Overtime

Working hours that extend beyond the normal or legally defined working hours, often compensated at a higher rate.

Chase Strategy

A demand-driven production strategy where production rates are adjusted to match demand to minimize inventory costs.

Flexibility Strategy

An approach to operations and decision-making that emphasizes the ability to adapt to changes, respond to unpredicted demands, or capitalize on new opportunities.