Under IFRS, Which of the Following Statements About Hedging a Foreign

question 1

Multiple Choice

Under IFRS, which of the following statements about hedging a foreign currency risk of an accepted purchase order is true?

• A)It must be accounted for using a fair-value hedge.
• B)It must be accounted for using a cash-flow hedge.
• C)It can be accounted for using either a fair-value hedge or a cash-flow hedge.
• D)It is not eligible for hedge accounting until it becomes an accounts payable.

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Definitions:

Negative

Refers to a condition or quantity less than zero, often indicating a deficit or loss in financial contexts.

Corporations

Legal entities separate from their owners, providing protection against personal liability, but subject to corporate taxes.

Firms

Organizations or business entities engaged in commercial, professional, or industrial activities, aiming to generate profits by providing goods or services.

Proprietorships

Proprietorships, or sole proprietorships, are businesses owned and operated by a single individual, with no legal distinction between the owner and the business entity.