Which of the Following Represents Three Criteria of Which All

question 13

Multiple Choice

Which of the following represents three criteria of which all must be met by a hedging relationship for it to qualify for hedge accounting?

• A) the hedging relationship consists only of eligible hedging instruments and eligible hedged items
• B) at the inception of the hedging relationship there is formal designation and documentation of the hedging relationship and the entity's risk management objective and strategy for undertaking the hedge
• C) the hedging relationship meets hedge effectiveness requirements
• D) all of the above

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Definitions:

Traditional Volume-Based

A costing method that allocates overhead based on a single volume-based cost driver, such as direct labor hours or machine hours, potentially leading to inaccurate product costs.

Qualitative Factors

Non-numeric or subjective factors that influence business decisions or activities.

Activity-Based Management

A management strategy focusing on identifying and analyzing activities that lead to cost improvement and business performance enhancement.

Customer Value

The perception of what a product or service is worth to a customer versus the possible alternatives.