A Company Has a Discount on a Forward Contract for a Foreign

question 49

Multiple Choice

A company has a discount on a forward contract for a foreign currency denominated asset. How is the discount recognized over the life of the contract under fair value hedge accounting?

• A) As a debit to discount expense.
• B) As a debit to amortization expense.
• C) As a debit to accumulated other comprehensive income.
• D) As a debit impact on net income, as a result of the hedge.
• E) As a decreases to sales.

---

Definitions:

Group Decision

A decision made collectively by two or more individuals in a group setting, usually involving discussion, negotiation, or consensus.

Solution Generation

The process of identifying and creating possible answers or methods to solve a problem or address a specific need.

Judgmental Questions

Judgmental Questions are inquiries that may contain a bias or assume something about the respondent, potentially influencing the response or making the asker appear prejudiced.

Co-Acting Group

A group of individuals working independently on separate tasks but within the same environment or towards a common goal.