A Fair Value Hedge That Meets the Requirements Under AASB

question 11

Multiple Choice

A fair value hedge that meets the requirements under AASB 139 for hedge accounting is accounted for in which of the following ways?

• A) Any gain or loss on the hedged item attributable to the hedge risk is recognised in the profit and loss
• B) Any gain or loss from re-measuring the hedging instrument at fair value or its foreign currency amount is recognised as equity
• C) When a firm commitment to acquire an asset is entered into and it is a hedged item, the initial carrying amount of the asset should never include the cumulative change in fair value of the commitment previously recognised in the balance sheet
• D) None of the above describes the correct accounting for a fair value hedge

---

Definitions:

Restructuring

A cognitive behavioral therapy technique involving the identification and modification of negative or irrational thoughts.

Functional Fixedness

A cognitive bias that limits a person to using an object only in the way it is traditionally used, hindering the ability to see alternative uses or solutions.

Mental Set

A framework or mindset that shapes how a person approaches problems, based on previous experiences and perceptions.

Restructuring

Restructuring in psychology refers to the process of identifying and altering maladaptive thought patterns to improve emotional regulation and behavior.