Under US GAAP, Which of the Following Conditions Must Be Met

question 54

Multiple Choice

Under U.S. GAAP, which of the following conditions must be met to qualify for hedge accounting?

• A) There must be formal documentation of the hedging relationship.
• B) A derivative must be used specifically to hedge fair value exposure or cash flow exposure.
• C) The hedge must be effective.
• D) All of the above must be met in order to qualify for hedge accounting.

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Definitions:

Liability

The state of being legally responsible for something, especially in terms of owing money or other obligations.

Incorporators

Incorporators are individuals or entities that are involved in creating and registering a corporation with the relevant state authority, completing and filing its articles of incorporation.

Federal Income Tax

A tax levied by the IRS on the annual earnings of individuals, corporations, trusts, and other legal entities.

Legally Operate

To conduct business activities in accordance with the laws and regulations of the jurisdiction in which the business exists.