How Should Discounts or Premiums on Forward Contracts Be Treated

question 39

Multiple Choice

How should discounts or premiums on forward contracts be treated if the derivative is hedging a foreign-currency-denominated asset?

• A) Carried on the balance sheet until the contract is completed
• B) Included in income in the period the derivative is acquired
• C) Amortized over the life of the forward contract
• D) None of the above

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Definitions:

Anterior Spinothalamic Tract

The anterior spinothalamic tract is a sensory pathway of the spinal cord that carries information about light touch and pressure to the brain.

Tertiary Neurons

Neurons that receive signals from secondary neurons and typically transmit them to the brain or spinal cord for integration.

Extrapyramidal Tracts

A network of neurons not part of the pyramidal system, involved in the control of involuntary motor movements.

Taste Area

A region in the brain, specifically within the gustatory cortex, responsible for processing taste information.