Arshan Inc

question 5

Multiple Choice

Arshan Inc. engaged in an interest rate swap on several of its fixed interest debenture notes in order to hedge against interest rate reduction that would raise the value of its debt. Possibly, investor perceptions may cause the value of the debentures to rise beyond the prices due to changes in general interest rates. If they do, the additional increase in the value of the debt:

• A)Would be recorded as an extraordinary loss in that accounting period.
• B)Would be recorded as part of continuing operations in that period's income statement.
• C)Would be recorded as an unrealized loss in that period's income statement.
• D)Would be ignored in that accounting period.

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Definitions:

ATP

Adenosine triphosphate, an energy-carrying molecule found in the cells of all living things which fuels cellular processes.

Diffusion Force

A force arising from the concentration gradient that moves molecules from an area of high concentration to one of lower concentration.

Zinc

A metallic chemical element essential for human health, involved in numerous body processes including immune function and enzyme activity.

Coenzymes

Organic non-protein molecules that bind to enzymes and are required for their activity.