A Company Has a Discount on a Forward Contract for a Foreign

question 49

Multiple Choice

A company has a discount on a forward contract for a foreign currency denominated asset. How is the discount recognized over the life of the contract under fair value hedge accounting?

• A) As a debit to discount expense.
• B) As a debit to amortization expense.
• C) As a debit to accumulated other comprehensive income.
• D) As a debit impact on net income, as a result of the hedge.
• E) As a decreases to sales.

---

Definitions:

Chromatin Structure

The complex of DNA and proteins, mainly histones, that forms chromosomes within the nucleus of eukaryotic cells, facilitating DNA packaging and gene expression regulation.

Initiator tRNA

The transfer RNA that recognizes the start codon on mRNA and initiates protein synthesis by bringing the first amino acid to the ribosome.

Amino Acid

Organic compounds that combine to form proteins, serving as the building blocks of life.

Leucine

an essential amino acid used in the biosynthesis of proteins, important for muscle repair and growth.