Answered: Which of the following statements…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Which of the following statements concerning the different types of hedging transactions is incorrect?

a. In hedging transaction designated as fair value hedge, unrealized holding gain or loss on hedged item will be recognized in profit or loss.

b. In hedging transaction designated as cash flow hedge, unrealized holding gain or loss on hedged item will be recognized in other comprehensive income with reclassifications adjustment to profit or loss if realized.

c. In hedging transaction which is undesignated, unrealized holding gain or loss on hedging instrument will be recognized in profit or loss.

d. In hedging transaction designated as hedge of net investment in foreign operation, unrealized holding gain or loss on hedging instrument which is considered effective portion will be recognized in other comprehensive income with reclassification adjustment to profit or loss if realized.

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