Under IFRS, Which of the Following Statements Is False Regarding

question 23

Multiple Choice

Under IFRS, which of the following statements is false regarding hedging?

• A)Hedge accounting refers to a set of accounting rules that allow a company to smooth the impact of foreign currency fluctuations on income.
• B)The gain or loss on a hedging instrument under a cash-flow hedge is first reported as other comprehensive income and then reclassified to income when the hedged item affects income.
• C)The gain or loss on a hedging instrument under a cash-flow hedge is first reported as income.
• D)Without the use of hedge accounting, an increased volatility on income would be realized resulting from a company's exposure to foreign currency risk.

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Definitions:

Differentiation

The processes by which behaviors and physical structures become specialized.

Habituation

Becoming used to a stimulus and therefore paying less attention to it.

Babinski reflex

A reflex action of the foot in which the big toe extends upwards and the other toes fan out when the sole of the foot is firmly stroked, common in infants.

Regression

A return to behavior characteristic of earlier stages of development.