Under IFRS, Which of the Following Statements Is True

question 28

Multiple Choice

Under IFRS, which of the following statements is true?

• A)The hedge of a forecasted transaction is accounted for using a fair-value hedge.
• B)The hedge of a firm commitment is accounted for using a cash-flow hedge.
• C)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.
• D)The gain or loss on a hedging instrument under a fair-value hedge is first reported as other comprehensive income and then reclassified to income when the hedged item affects income.

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Definitions:

Variable Expense

Costs that change in proportion to the level of production or sales activity.

Contribution Margin Ratio

The percentage of each sales dollar that remains after variable costs have been deducted, indicating how much contributes to fixed costs and profits.

Cost-Volume-Profit Graph

A visual representation that shows the relationship between cost, volume of production, and profit, to analyze how changes in variables affect profits.

Total Revenue

The overall amount of money generated by a business from its activities, such as sales of goods or services, before any expenses are subtracted.