In Order for a Fair Value Hedge to Receive Special

question 34

Multiple Choice

In order for a fair value hedge to receive special accounting treatment, the

• A)​derivative instrument must be held until it expires or is exercised.
• B)​criteria necessary for special accounting treatment must only be met at the inception of the hedge.
• C)​entity may designate the derivative instrument as a fair value hedge when it is determined the hedge is effective.
• D)​hedging relationship must be considered highly effective.

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Definitions:

Latent Functions

Unintended, unrecognized consequences of activities that help a system adjust.

Manifest Functions

The recognized and intended consequences of any social pattern, process, or structure.

Expressive Functions

Activities and roles focused on the emotional or relational aspects of a group or family, emphasizing support, communication, and emotional bonding.

Instrumental Functions

The practical and task-oriented activities or roles performed by an individual or within an entity, aimed at achieving specific objectives.