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CPA AUD Flashcards > AUD 3 Internal Control 16 - 9 Investing and Financing Cycle - Derivatives and Hedge Accounting > Flashcards

AUD 3 Internal Control 16 - 9 Investing and Financing Cycle - Derivatives and Hedge Accounting Flashcards

1
Q

The Basics of Accounting for Derivatives and Hedge Accounting

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
  2. At inception and each period thereafter an entity must demonstrate that the relationship is expected to be highly effective on a go-forward basis (prospectively) and has actually been effective since the date of designation (retrospectively);
  3. Each period an entity must recognize any ineffectiveness in profit or loss.
A

The Basics of Accounting for Derivatives and Hedge Accounting

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
  2. At inception and each period thereafter an entity must demonstrate that the relationship is expected to be highly effective on a go-forward basis (prospectively) and has actually been effective since the date of designation (retrospectively);
  3. Each period an entity must recognize any ineffectiveness in profit or loss.
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2
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eli_____ hedge relationship:

A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
  2. At inception and each period thereafter an entity must demonstrate that the relationship is expected to be highly effective on a go-forward basis (prospectively) and has actually been effective since the date of designation (retrospectively);
  3. Each period an entity must recognize any ineffectiveness in profit or loss.
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3
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be sat____ed in order for hedge accounting to be applied to any eligible hedge relationship:

A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

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4
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic req_________s that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

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5
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible he___ relationship:

A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

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6
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal doc_____________ of the hedge relationship should exist at the time of designation;
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
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7
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Fo____ documentation of the hedge relationship should exist at the time of designation;
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
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8
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the he___ relationship should exist at the time of designation;
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
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9
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of desi______n;
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
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10
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
  2. At inc_____ and each period thereafter an entity must demonstrate that
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
  2. At inception and each period thereafter an entity must demonstrate that
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11
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
  2. At inception and each period thereafter an entity must dem________ that
    the relationship is expected to be highly effective on a go-forward basis (prospectively)
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
  2. At inception and each period thereafter an entity must demonstrate that
    the relationship is expected to be highly effective on a go-forward basis (prospectively)
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12
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. At inception and each period thereafter an entity must demonstrate that
    the relationship is expected to be highly eff______ on a go-forward basis (prospectively)
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. At inception and each period thereafter an entity must demonstrate that
    the relationship is expected to be highly effective on a go-forward basis (prospectively)
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13
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. At inception and each period thereafter an entity must demonstrate that
    the relationship is expected to be hi__ly effective on a go-forward basis (prospectively)
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. At inception and each period thereafter an entity must demonstrate that
    the relationship is expected to be highly effective on a go-forward basis (prospectively)
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14
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. At inception and each period thereafter an entity must demonstrate that
    the relationship is expected to be highly effective on a go-forward basis (pro_______ly)
    and has actually been effective since the date of designation (retrospectively);
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. At inception and each period thereafter an entity must demonstrate that
    the relationship is expected to be highly effective on a go-forward basis (prospectively)
    and has actually been effective since the date of designation (retrospectively);
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15
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. At inception and each period thereafter an entity must demonstrate that
    the relationship is expected to be highly effective on a go-forward basis (prospectively)
    and has actually been ef________ since the date of designation (retrospectively);
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. At inception and each period thereafter an entity must demonstrate that
    the relationship is expected to be highly effective on a go-forward basis (prospectively)
    and has actually been effective since the date of designation (retrospectively);
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16
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. At inception and each period thereafter an entity must demonstrate that
    the relationship is expected to be highly effective on a go-forward basis (prospectively)
    and has actually been effective since the date of desi_______ (retrospectively);
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. At inception and each period thereafter an entity must demonstrate that
    the relationship is expected to be highly effective on a go-forward basis (prospectively)
    and has actually been effective since the date of designation (retrospectively);
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17
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. At inception and each period thereafter an entity must demonstrate that
    the relationship is expected to be highly effective on a go-forward basis (prospectively)
    and has actually been effective since the date of designation (retro_______ly);
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. At inception and each period thereafter an entity must demonstrate that
    the relationship is expected to be highly effective on a go-forward basis (prospectively)
    and has actually been effective since the date of designation (retrospectively);
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18
Q

prospectively =

A

prospectively = go-forward basis

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19
Q

retrospectively =

A

retrospectively = looking backward

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20
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. At inception and each period thereafter an entity must demonstrate that the relationship is expected to be highly effective on a go-forward basis (prospectively) and has actually been effective since the date of designation (retrospectively);
  2. Each period an entity must re____ize any ineffectiveness in profit or loss.
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. At inception and each period thereafter an entity must demonstrate that the relationship is expected to be highly effective on a go-forward basis (prospectively) and has actually been effective since the date of designation (retrospectively);
  2. Each period an entity must recognize any ineffectiveness in profit or loss.
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21
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. At inception and each period thereafter an entity must demonstrate that the relationship is expected to be highly effective on a go-forward basis (prospectively) and has actually been effective since the date of designation (retrospectively);
  2. Each period an entity must recognize any ineff_________ in profit or loss.
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. At inception and each period thereafter an entity must demonstrate that the relationship is expected to be highly effective on a go-forward basis (prospectively) and has actually been effective since the date of designation (retrospectively);
  2. Each period an entity must recognize any ineffectiveness in profit or loss.
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22
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Each period an entity must recognize any ineffectiveness in pr__it or loss.
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Each period an entity must recognize any ineffectiveness in profit or loss.
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23
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
  2. At inception and each period thereafter an entity must demonstrate that the relationship is expected to be highly effective on a go-forward basis (prospectively) and has actually been effective since the date of designation (retrospectively);
  3. Each period an entity must recognize any ineffectiveness in profit or l__s.
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
  2. At inception and each period thereafter an entity must demonstrate that the relationship is expected to be highly effective on a go-forward basis (prospectively) and has actually been effective since the date of designation (retrospectively);
  3. Each period an entity must recognize any ineffectiveness in profit or loss.
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24
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Fo____ docu________of the hedge relationship should exist at the time of designation;
  2. At inception and each period thereafter an entity must demonstrate that the relationship is expected to be highly effective on a go-forward basis (prospectively) and has actually been effective since the date of designation (retrospectively);
  3. Each period an entity must recognize any ineffectiveness in profit or loss.
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
  2. At inception and each period thereafter an entity must demonstrate that the relationship is expected to be highly effective on a go-forward basis (prospectively) and has actually been effective since the date of designation (retrospectively);
  3. Each period an entity must recognize any ineffectiveness in profit or loss.
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25
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
  2. At inc______ and each period thereafter an entity must de_________ that the relationship is expected to be highly effective on a go-forward basis (prospectively) and has actually been effective since the date of designation (retrospectively);
  3. Each period an entity must recognize any ineffectiveness in profit or loss.
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
  2. At inception and each period thereafter an entity must demonstrate that the relationship is expected to be highly effective on a go-forward basis (prospectively) and has actually been effective since the date of designation (retrospectively);
  3. Each period an entity must recognize any ineffectiveness in profit or loss.
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26
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
  2. At inception and each period thereafter an entity must demonstrate that the relationship is expected to be h___ly eff______ on a go-forward basis (prospectively) and has actually been effective since the date of designation (retrospectively);
  3. Each period an entity must recognize any ineffectiveness in profit or loss.
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
  2. At inception and each period thereafter an entity must demonstrate that the relationship is expected to be highly effective on a go-forward basis (prospectively) and has actually been effective since the date of designation (retrospectively);
  3. Each period an entity must recognize any ineffectiveness in profit or loss.
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27
Q

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
  2. At inception and each period thereafter an entity must demonstrate that the relationship is expected to be highly effective on a go-forward basis (prospectively) and has actually been effective since the date of designation (retrospectively);
  3. Each period an entity must re____ize any ineff_________ in profit or loss.
A

Qualifying for Hedge Accounting

Documentation

There are 3 basic requirements that must be satisfied in order for hedge accounting to be applied to any eligible hedge relationship:

  1. Formal documentation of the hedge relationship should exist at the time of designation;
  2. At inception and each period thereafter an entity must demonstrate that the relationship is expected to be highly effective on a go-forward basis (prospectively) and has actually been effective since the date of designation (retrospectively);
  3. Each period an entity must recognize any ineffectiveness in profit or loss.
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28
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the risk being hedged;
  3. Clear identification of the hedged item and hedging derivative including the key terms; and
  4. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the risk being hedged;
  3. Clear identification of the hedged item and hedging derivative including the key terms; and
  4. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
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29
Q

Qualifying for Hedge Accounting

Documentation

Formal do__________ of the hedge relationship needs to exist at the date of designation that details:

A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

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30
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the h___e relationship needs to exist at the date of designation that details:

A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

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31
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of desi________ that details:

A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

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32
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s r___ management objective and strategy for undertaking the hedge;
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
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33
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management obj_______ and strategy for undertaking the hedge;
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
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34
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and str____y for undertaking the hedge;
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
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35
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The na____ of the risk being hedged;
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the risk being hedged;
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36
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the ri__ being hedged;
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the risk being hedged;
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37
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The nature of the risk being hedged;
  2. Clear identification of the hedged it__ and hedging derivative including the key terms;
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The nature of the risk being hedged;
  2. Clear identification of the hedged item and hedging derivative including the key terms;
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38
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The nature of the risk being hedged;
  2. Clear identification of the hedged item and hedging deri_____ including the key terms;
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The nature of the risk being hedged;
  2. Clear identification of the hedged item and hedging derivative including the key terms;
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39
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. Clear identification of the hedged item and hedging derivative including the key terms; and
  2. The me____s through which the effectiveness of the relationship will be assessed o
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. Clear identification of the hedged item and hedging derivative including the key terms; and
  2. The methods through which the effectiveness of the relationship will be assessed
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40
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. Clear identification of the hedged item and hedging derivative including the key terms; and
  2. The methods through which the ef__________ of the relationship will be assessed
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. Clear identification of the hedged item and hedging derivative including the key terms; and
  2. The methods through which the effectiveness of the relationship will be assessed
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41
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. Clear identification of the hedged item and hedging derivative including the key terms; and
  2. The methods through which the effectiveness of the relationship will be as____ed on both a prospective and retrospective basis,
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. Clear identification of the hedged item and hedging derivative including the key terms; and
  2. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis,
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42
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. Clear identification of the hedged item and hedging derivative including the key terms; and
  2. The methods through which the effectiveness of the relationship will be assessed on both a pros______ and retrospective basis,
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. Clear identification of the hedged item and hedging derivative including the key terms; and
  2. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis,
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43
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. Clear identification of the hedged item and hedging derivative including the key terms; and
  2. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retro_______ basis, and how any ineffectiveness will be measured.
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. Clear identification of the hedged item and hedging derivative including the key terms; and
  2. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
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44
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. Clear identification of the hedged item and hedging derivative including the key terms; and
  2. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineff______ess will be measured.
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. Clear identification of the hedged item and hedging derivative including the key terms; and
  2. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
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45
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. Clear identification of the hedged item and hedging derivative including the key terms; and
  2. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be me____ed.
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. Clear identification of the hedged item and hedging derivative including the key terms; and
  2. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
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46
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge rel_________ needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the risk being hedged;
  3. Clear identification of the hedged item and hedging derivative including the key terms; and
  4. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the risk being hedged;
  3. Clear identification of the hedged item and hedging derivative including the key terms; and
  4. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
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47
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the d___ of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the risk being hedged;
  3. Clear identification of the hedged item and hedging derivative including the key terms; and
  4. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the risk being hedged;
  3. Clear identification of the hedged item and hedging derivative including the key terms; and
  4. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
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48
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk ma_________ objective and strategy for undertaking the h___e;
  2. The nature of the risk being hedged;
  3. Clear identification of the hedged item and hedging derivative including the key terms; and
  4. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the risk being hedged;
  3. Clear identification of the hedged item and hedging derivative including the key terms; and
  4. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
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49
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nat___ of the r__k being hedged;
  3. Clear identification of the hedged item and hedging derivative including the key terms; and
  4. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the risk being hedged;
  3. Clear identification of the hedged item and hedging derivative including the key terms; and
  4. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
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50
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the risk being hedged;
  3. Cl___ ident________ of the hedged item and hedging derivative including the key terms; and
  4. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the risk being hedged;
  3. Clear identification of the hedged item and hedging derivative including the key terms; and
  4. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
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51
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the risk being hedged;
  3. Clear identification of the hedged i___ and hedging der______ including the key terms; and
  4. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the risk being hedged;
  3. Clear identification of the hedged item and hedging derivative including the key terms; and
  4. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
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52
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the risk being hedged;
  3. Clear identification of the hedged item and hedging derivative including the key terms; and
  4. The met___s through which the eff______ess of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the risk being hedged;
  3. Clear identification of the hedged item and hedging derivative including the key terms; and
  4. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
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53
Q

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the risk being hedged;
  3. Clear identification of the hedged item and hedging derivative including the key terms; and
  4. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any inef_______ess will be measured.
A

Qualifying for Hedge Accounting

Documentation

Formal documentation of the hedge relationship needs to exist at the date of designation that details:

  1. The entity’s risk management objective and strategy for undertaking the hedge;
  2. The nature of the risk being hedged;
  3. Clear identification of the hedged item and hedging derivative including the key terms; and
  4. The methods through which the effectiveness of the relationship will be assessed on both a prospective and retrospective basis, and how any ineffectiveness will be measured.
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54
Q

Qualifying for Hedge Accounting

Documentation

The met______ies used to assess and measure effectiveness need to be described in sufficient detail

A

Qualifying for Hedge Accounting

Documentation

The methodologies used to assess and measure effectiveness need to be described in sufficient detail

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55
Q

Qualifying for Hedge Accounting

Documentation

The methodologies used to assess and measure ef______ess need to be described in sufficient detail

A

Qualifying for Hedge Accounting

Documentation

The methodologies used to assess and measure effectiveness need to be described in sufficient detail

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56
Q

Qualifying for Hedge Accounting

Documentation

The methodologies used to assess and measure effectiveness need to be de_____ed in sufficient detail

that would allow a reasonably knowledgeable individual to be able to understand

A

Qualifying for Hedge Accounting

Documentation

The methodologies used to assess and measure effectiveness need to be described in sufficient detail

that would allow a reasonably knowledgeable individual to be able to understand

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57
Q

Qualifying for Hedge Accounting

Documentation

The methodologies used to assess and measure effectiveness need to be described in sufficient detail

that would allow a reasonably know______ble individual to be able to understand

A

Qualifying for Hedge Accounting

Documentation

The methodologies used to assess and measure effectiveness need to be described in sufficient detail

that would allow a reasonably knowledgeable individual to be able to understand

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58
Q

Qualifying for Hedge Accounting

Documentation

The methodologies used to assess and measure effectiveness need to be described in sufficient detail

that would allow a reasonably knowledgeable individual to be able to und________ and consistently reproduce the results of the assessment.

A

Qualifying for Hedge Accounting

Documentation

The methodologies used to assess and measure effectiveness need to be described in sufficient detail

that would allow a reasonably knowledgeable individual to be able to understand and consistently reproduce the results of the assessment.

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59
Q

Qualifying for Hedge Accounting

Documentation

The methodologies used to assess and measure effectiveness need to be described in sufficient detail

that would allow a reasonably knowledgeable individual to be able to understand and consistently reproduce the re____s of the assessment.

A

Qualifying for Hedge Accounting

Documentation

The methodologies used to assess and measure effectiveness need to be described in sufficient detail

that would allow a reasonably knowledgeable individual to be able to understand and consistently reproduce the results of the assessment.

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60
Q

Qualifying for Hedge Accounting

Documentation

The methodologies used to assess and measure effectiveness need to be described in sufficient detail

that would allow a reasonably knowledgeable individual to be able to understand and consistently reproduce the results of the as_________.

A

Qualifying for Hedge Accounting

Documentation

The methodologies used to assess and measure effectiveness need to be described in sufficient detail

that would allow a reasonably knowledgeable individual to be able to understand and consistently reproduce the results of the assessment.

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61
Q

Qualifying for Hedge Accounting

Documentation

The methodologies used to assess and measure effectiveness need to be described in sufficient detail that would allow a reasonably knowledgeable individual to be able to understand and consistently reproduce the results of the assessment.

This eff________ assessment and measurement aspect of the requirements can get particularly complicated requiring specialized resources in certain instances for the more complex types of relationships.

A

Qualifying for Hedge Accounting

Documentation

The methodologies used to assess and measure effectiveness need to be described in sufficient detail that would allow a reasonably knowledgeable individual to be able to understand and consistently reproduce the results of the assessment.

This effectiveness assessment and measurement aspect of the requirements can get particularly complicated requiring specialized resources in certain instances for the more complex types of relationships.

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62
Q

Qualifying for Hedge Accounting

Documentation

This effectiveness asse______t and measurement aspect of the requirements can get particularly complicated requiring specialized resources in certain instances for the more complex types of relationships.

A

Qualifying for Hedge Accounting

Documentation

This effectiveness assessment and measurement aspect of the requirements can get particularly complicated requiring specialized resources in certain instances for the more complex types of relationships.

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63
Q

Qualifying for Hedge Accounting

Documentation

This effectiveness assessment and measurement aspect of the requirements can get particularly com_____ed requiring specialized resources in certain instances for the more complex types of relationships.

A

Qualifying for Hedge Accounting

Documentation

This effectiveness assessment and measurement aspect of the requirements can get particularly complicated requiring specialized resources in certain instances for the more complex types of relationships.

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64
Q

Qualifying for Hedge Accounting

Documentation

This effectiveness assessment and measurement aspect of the requirements can get particularly complicated requiring spe_____ed resources in certain instances for the more complex types of relationships.

A

Qualifying for Hedge Accounting

Documentation

This effectiveness assessment and measurement aspect of the requirements can get particularly complicated requiring specialized resources in certain instances for the more complex types of relationships.

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65
Q

Qualifying for Hedge Accounting

Documentation

This effectiveness assessment and measurement aspect of the requirements can get particularly complicated requiring specialized resources in certain instances for the more complex types of rela_______s.

A

Qualifying for Hedge Accounting

Documentation

This effectiveness assessment and measurement aspect of the requirements can get particularly complicated requiring specialized resources in certain instances for the more complex types of relationships.

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66
Q

Qualifying for Hedge Accounting

Documentation

The methodologies used to assess and measure effectiveness need to be described in sufficient de____ that would allow a reasonably knowledgeable individual to be able to understand and consistently reproduce the results of the assessment.

This effectiveness assessment and measurement aspect of the requirements can get particularly complicated requiring specialized resources in certain instances for the more com____ types of relationships.

A

Qualifying for Hedge Accounting

Documentation

The methodologies used to assess and measure effectiveness need to be described in sufficient detail that would allow a reasonably knowledgeable individual to be able to understand and consistently reproduce the results of the assessment.

This effectiveness assessment and measurement aspect of the requirements can get particularly complicated requiring specialized resources in certain instances for the more complex types of relationships.

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67
Q

Qualifying for Hedge Accounting

Documentation

The me________ies used to assess and measure effectiveness need to be described in suff_____ detail that would allow a reasonably knowledgeable individual to be able to understand and consistently reproduce the results of the assessment.

This effectiveness assessment and measurement aspect of the requirements can get particularly complicated requiring specialized resources in certain instances for the more complex types of relationships.

A

Qualifying for Hedge Accounting

Documentation

The methodologies used to assess and measure effectiveness need to be described in sufficient detail that would allow a reasonably knowledgeable individual to be able to understand and consistently reproduce the results of the assessment.

This effectiveness assessment and measurement aspect of the requirements can get particularly complicated requiring specialized resources in certain instances for the more complex types of relationships.

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68
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

At each subsequent period (at least quarterly under current U.S. standards, and at a minimum each time an entity prepares financial statements under international standards), the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective since inception of the hedge.

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test, or discontinued prospectively form the previous assessment date should there be a failure of the retrospective test.

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

At each subsequent period (at least quarterly under current U.S. standards, and at a minimum each time an entity prepares financial statements under international standards), the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective since inception of the hedge.

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test, or discontinued prospectively form the previous assessment date should there be a failure of the retrospective test.

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69
Q

Assessment of Effectiveness

A critical requ_______ before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

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70
Q

Assessment of Effectiveness

A critical requirement before one can apply he___ accounting is the analysis that supports the assessment of hedge effectiveness

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

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71
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the a____sis that supports the assessment of hedge effectiveness

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

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72
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that su____ts the assessment of hedge effectiveness

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

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73
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the ass_______ of hedge effectiveness

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

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74
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge eff_______ss

by analyzing the relationship between the changes in fair value

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the changes in fair value o

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75
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the rel_______ between the changes in fair value or cash flows

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the changes in fair value or cash flows

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76
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the ch____s in fair value or cash flows

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the changes in fair value or cash flows

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77
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the changes in f___ value or cash flows

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the changes in fair value or cash flows

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78
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by a___yzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument

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79
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the changes in fair value or c__h flows of the hedging derivative instrument

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument

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80
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the changes in fair value or cash flows of the h___ing derivative instrument

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument

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81
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the changes in fair value or cash flows of the hedging de_______ instrument versus those of the hedged item.

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

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82
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative ins________ versus those of the hedged item.

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

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83
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the h___ed item.

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

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84
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged i___.

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness

by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

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85
Q

Assessment of Effectiveness

A crit____ requirement be____ one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

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86
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the an____is that su____ts the assessment of hedge effectiveness by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

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87
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the ass________ of hedge effec_______ by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

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88
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness by an_____ng the rela_______ between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

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89
Q

Assessment of Effectiveness

At the inc_______ of each hedge,

A

Assessment of Effectiveness

At the inception of each hedge,

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90
Q

Assessment of Effectiveness

At the inception of each h___e, an organization is required to demonstrate that

A

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that

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91
Q

Assessment of Effectiveness

At the inception of each hedge, an organization is re____ed to demonstrate that the hedge is expected to be highly effective

A

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective

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92
Q

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is ex____ed to be highly effective

A

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective

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93
Q

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be h___ly effective throughout the designated term

A

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term

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94
Q

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly eff______ throughout the designated term

A

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term

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95
Q

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the de_______d term

in achieving offsetting changes in the fair value or cash flows

A

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term

in achieving offsetting changes in the fair value or cash flows

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96
Q

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term

in achieving of___tting changes in the fair value or cash flows

A

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term

in achieving offsetting changes in the fair value or cash flows

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97
Q

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term

in achieving offsetting ch____s in the fair value or cash flows

A

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term

in achieving offsetting changes in the fair value or cash flows

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98
Q

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term

in achieving offsetting changes in the fair va___ or cash flows attributable to the hedge risk

A

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term

in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk

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99
Q

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term

in achieving offsetting changes in the fair value or cash flows attributable to the hedge r___ through a prospective test.

A

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term

in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

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100
Q

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term

in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a pro_________ test.

A

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term

in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

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101
Q

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term

in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective t__t.

A

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term

in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

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102
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

At the inception of each hedge, an orga________ is required to dem________ that the hedge is expected to be highly effective throughout the designated term in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

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103
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in ac_____ing off____ting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

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104
Q

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in achieving off____ing ch_____s in the fair value or cash flows attributable to the hedge risk through a prospective test.

A

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

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105
Q

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in achieving offsetting changes in the fair value or cash flows att_________ to the hedge ri__ through a prospective test.

At each subsequent period (at least quarterly under current U.S. standards, and at a minimum each time an entity prepares financial statements under international standards), the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

A

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

At each subsequent period (at least quarterly under current U.S. standards, and at a minimum each time an entity prepares financial statements under international standards), the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

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106
Q

Assessment of Effectiveness

At each subsequent pe____
(at least quarterly under current U.S. standards,

A

Assessment of Effectiveness

At each subsequent period
(at least quarterly under current U.S. standards,

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107
Q

Assessment of Effectiveness

At each subsequent period
(at least qua___ly under current U.S. standards,

A

Assessment of Effectiveness

At each subsequent period
(at least quarterly under current U.S. standards,

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108
Q

Assessment of Effectiveness

At each subsequent period
(at least quarterly under current U.S. standards,
and at a mini___each time an entity prepares financial statements under international standards),

A

Assessment of Effectiveness

At each subsequent period
(at least quarterly under current U.S. standards,
and at a minimum each time an entity prepares financial statements under international standards),

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109
Q

Assessment of Effectiveness

At each subsequent period
(at least quarterly under current U.S. standards,
and at a minimum each time an entity pre____s financial statements under international standards),

A

Assessment of Effectiveness

At each subsequent period
(at least quarterly under current U.S. standards,
and at a minimum each time an entity prepares financial statements under international standards),

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110
Q

Assessment of Effectiveness

At each subs_______ period
(at least quarterly under current U.S. standards,
and at a minimum each time an entity prepares financial statements under international standards),

the prospective test should be rerun

A

Assessment of Effectiveness

At each subsequent period
(at least quarterly under current U.S. standards,
and at a minimum each time an entity prepares financial statements under international standards),

the prospective test should be rerun

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111
Q

Assessment of Effectiveness

At each subsequent period

the pros_______ test should be rerun

A

Assessment of Effectiveness

At each subsequent period

the prospective test should be rerun

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112
Q

Assessment of Effectiveness

At each subsequent period

the prospective t__t should be rerun to demonstrate that the relationship is still expected to be highly effective

A

Assessment of Effectiveness

At each subsequent period

the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective

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113
Q

Assessment of Effectiveness

At each subsequent period

the prospective test should be re__n to demonstrate that the relationship is still expected to be highly effective

A

Assessment of Effectiveness

At each subsequent period

the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective

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114
Q

Assessment of Effectiveness

At each subsequent period

the prospective test should be rerun to demonstrate that the rela______ is still expected to be highly effective

A

Assessment of Effectiveness

At each subsequent period

the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective

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115
Q

Assessment of Effectiveness

At each subsequent period

the prospective test should be rerun to demonstrate that the relationship is still ex______d to be highly effective

A

Assessment of Effectiveness

At each subsequent period

the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective

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116
Q

Assessment of Effectiveness

At each subsequent period

the prospective test should be rerun to demonstrate that the relationship is still expected to be highly eff______ for the remainder of the term of the hedge.

A

Assessment of Effectiveness

At each subsequent period

the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

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117
Q

Assessment of Effectiveness

At each subsequent period

the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the rem_______ of the term of the hedge.

A

Assessment of Effectiveness

At each subsequent period

the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

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118
Q

Assessment of Effectiveness

At each subsequent period

the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the t___ of the hedge.

A

Assessment of Effectiveness

At each subsequent period

the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

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119
Q

Assessment of Effectiveness

At each subsequent pe____ (at least quarterly under current U.S. standards, and at a minimum each time an entity prepares financial statements under international standards), the prospective t__t should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

A

Assessment of Effectiveness

At each subsequent period (at least quarterly under current U.S. standards, and at a minimum each time an entity prepares financial statements under international standards), the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

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120
Q

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

At each subsequent period (at least quarterly under current U.S. standards, and at a minimum each time an entity prepares financial statements under international standards), the prospective test should be re___ to dem_______ that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

A

Assessment of Effectiveness

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

At each subsequent period (at least quarterly under current U.S. standards, and at a minimum each time an entity prepares financial statements under international standards), the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

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121
Q

Assessment of Effectiveness

At each subsequent period (at least quarterly under current U.S. standards, and at a minimum each time an entity prepares financial statements under international standards), the prospective test should be rerun to demonstrate that the relationship is st___ expected to be hi___y effective for the remainder of the term of the hedge.

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective since inception of the hedge.

A

Assessment of Effectiveness

At each subsequent period (at least quarterly under current U.S. standards, and at a minimum each time an entity prepares financial statements under international standards), the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective since inception of the hedge.

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122
Q

Assessment of Effectiveness

At each period e__, a retrospective test also has to be conducted

A

Assessment of Effectiveness

At each period end, a retrospective test also has to be conducted

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123
Q

Assessment of Effectiveness

At each pe____ end, a retrospective test also has to be conducted

A

Assessment of Effectiveness

At each period end, a retrospective test also has to be conducted

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124
Q

Assessment of Effectiveness

At each period end, a retro_______ test also has to be conducted

A

Assessment of Effectiveness

At each period end, a retrospective test also has to be conducted

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125
Q

Assessment of Effectiveness

At each period end, a retrospective t__t also has to be conducted to demonstrate that

A

Assessment of Effectiveness

At each period end, a retrospective test also has to be conducted to demonstrate that

126
Q

Assessment of Effectiveness

At each period end, a retrospective test also has to be conducted to dem________ that the hedge has been highly effective since inception of the hedge.

A

Assessment of Effectiveness

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective since inception of the hedge.

127
Q

Assessment of Effectiveness

At each period end, a retrospective test also has to be conducted to demonstrate that the h______ has been highly effective since inception of the hedge.

A

Assessment of Effectiveness

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective since inception of the hedge.

128
Q

Assessment of Effectiveness

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly ef_______ since inception of the hedge.

A

Assessment of Effectiveness

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective since inception of the hedge.

129
Q

Assessment of Effectiveness

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective since inc_______ of the hedge.

A

Assessment of Effectiveness

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective since inception of the hedge.

130
Q

Assessment of Effectiveness

At each subsequent period (at least quarterly under current U.S. standards, and at a minimum each time an entity prepares financial statements under international standards), the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

At ea__ period e__, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective since inception of the hedge.

A

Assessment of Effectiveness

At each subsequent period (at least quarterly under current U.S. standards, and at a minimum each time an entity prepares financial statements under international standards), the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective since inception of the hedge.

131
Q

Assessment of Effectiveness

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective si___ inception of the he___.

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test, or discontinued prospectively form the previous assessment date should there be a failure of the retrospective test.

A

Assessment of Effectiveness

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective since inception of the hedge.

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test, or discontinued prospectively form the previous assessment date should there be a failure of the retrospective test.

132
Q

Assessment of Effectiveness

Hedge a_____ting must be discontinued prospectively from the current assessment date

A

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date

133
Q

Assessment of Effectiveness

Hedge accounting must be dis_______ed prospectively from the current assessment date should there be a failure of the prospective test,

A

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test,

134
Q

Assessment of Effectiveness

Hedge accounting must be discontinued pro_______ly from the current assessment date should there be a failure of the prospective test,

A

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test,

135
Q

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the curr____ assessment date should there be a failure of the prospective test,

A

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test,

136
Q

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment d___ should there be a failure of the prospective test,

A

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test,

137
Q

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective t__t,

or discontinued prospectively

A

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test,

or discontinued prospectively

138
Q

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test,

or discontinued prospectively form the prev____ assessment date

A

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test,

or discontinued prospectively form the previous assessment date

139
Q

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test,

or disc________ed prospectively form the previous assessment date

A

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test,

or discontinued prospectively form the previous assessment date

140
Q

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test,

or discontinued prospectively form the previous assessment date should there be a fai____ of the retrospective test.

A

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test,

or discontinued prospectively form the previous assessment date should there be a failure of the retrospective test.

141
Q

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test,

or discontinued prospectively form the previous assessment date should there be a failure of the retros______ test.

A

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test,

or discontinued prospectively form the previous assessment date should there be a failure of the retrospective test.

142
Q

Assessment of Effectiveness

He___ accounting m__t be discontinued prospectively from the current assessment date should there be a failure of the prospective test,

or discontinued prospectively form the previous assessment date should there be a failure of the retrospective test.

A

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test,

or discontinued prospectively form the previous assessment date should there be a failure of the retrospective test.

143
Q

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a fail___ of the prospective test,

or discontinued prospectively form the previous assessment date should there be a fail___ of the retrospective test.

A

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test,

or discontinued prospectively form the previous assessment date should there be a failure of the retrospective test.

144
Q

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the pro_______ test,

or discontinued prospectively form the previous assessment date should there be a failure of the retro________ test.

A

Assessment of Effectiveness

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test,

or discontinued prospectively form the previous assessment date should there be a failure of the retrospective test.

145
Q

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

At each subsequent period (at least quarterly under current U.S. standards, and at a minimum each time an entity prepares financial statements under international standards), the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective since inception of the hedge.

Hedge accounting m__t be disc_______ed prospectively from the current assessment date should there be a failure of the prospective test, or discontinued prospectively form the previous assessment date should there be a failure of the retrospective test.

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

At each subsequent period (at least quarterly under current U.S. standards, and at a minimum each time an entity prepares financial statements under international standards), the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective since inception of the hedge.

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test, or discontinued prospectively form the previous assessment date should there be a failure of the retrospective test.

146
Q

Ass________ of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

At each subsequent period (at least quarterly under current U.S. standards, and at a minimum each time an entity prepares financial statements under international standards), the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective since inception of the hedge.

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test, or discontinued prospectively form the previous assessment date should there be a failure of the retrospective test.

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

At each subsequent period (at least quarterly under current U.S. standards, and at a minimum each time an entity prepares financial statements under international standards), the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective since inception of the hedge.

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test, or discontinued prospectively form the previous assessment date should there be a failure of the retrospective test.

147
Q

Assessment of Ef__________

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

At each subsequent period (at least quarterly under current U.S. standards, and at a minimum each time an entity prepares financial statements under international standards), the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective since inception of the hedge.

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test, or discontinued prospectively form the previous assessment date should there be a failure of the retrospective test.

A

Assessment of Effectiveness

A critical requirement before one can apply hedge accounting is the analysis that supports the assessment of hedge effectiveness by analyzing the relationship between the changes in fair value or cash flows of the hedging derivative instrument versus those of the hedged item.

At the inception of each hedge, an organization is required to demonstrate that the hedge is expected to be highly effective throughout the designated term in achieving offsetting changes in the fair value or cash flows attributable to the hedge risk through a prospective test.

At each subsequent period (at least quarterly under current U.S. standards, and at a minimum each time an entity prepares financial statements under international standards), the prospective test should be rerun to demonstrate that the relationship is still expected to be highly effective for the remainder of the term of the hedge.

At each period end, a retrospective test also has to be conducted to demonstrate that the hedge has been highly effective since inception of the hedge.

Hedge accounting must be discontinued prospectively from the current assessment date should there be a failure of the prospective test, or discontinued prospectively form the previous assessment date should there be a failure of the retrospective test.

148
Q

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship (that is, the extent to which the change in the fair value or cash flows of the derivative instrument does not offset the change in fair value or cash flows of the hedged item).

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship (that is, the extent to which the change in the fair value or cash flows of the derivative instrument does not offset the change in fair value or cash flows of the hedged item).

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

149
Q

Measurement of Ineffectiveness

When applying hedge accounting an entity is also re____ed to measure any ineffectiveness that may exist in the relationship

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

150
Q

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to mea____ any ineffectiveness that may exist in the relationship

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

151
Q

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any inef_________ that may exist in the relationship

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

152
Q

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the rela________

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item).

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item).

153
Q

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the ch____ in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item).

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item).

154
Q

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the f___ value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item).

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item).

155
Q

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or c__h flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item).

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item).

156
Q

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the der_____ instrument

does not offset the change in fair value or cash flows of the hedged item).

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item).

157
Q

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument

does not off___ the change in fair value or cash flows of the hedged item).

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item).

158
Q

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument

does not offset the ch____ in fair value or cash flows of the hedged item).

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item).

159
Q

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair va___ or cash flows of the hedged item).

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item).

160
Q

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the h___ed item).

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item).

161
Q

What is ineffectiveness in hedging relationship?

Ineffectiveness in hedging relationship

= When the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item

A

What is ineffectiveness in hedging relationship?

Ineffectiveness in hedging relationship

= When the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item

162
Q

What is ineffectiveness in hedging relationship?

Ineffectiveness in hedging relationship

= When the ch____ in the fair value or cash flows of the derivative instrument

does n__ off___ the change in fair value or cash flows of the hedged item

A

What is ineffectiveness in hedging relationship?

Ineffectiveness in hedging relationship

= When the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item

163
Q

What is ineffectiveness in hedging relationship?

Ineffectiveness in hedging relationship

= When the change in the fair value or cash flows of the de_______ instrument

does not offset the change in fair value or cash flows of the h___ed item

A

What is ineffectiveness in hedging relationship?

Ineffectiveness in hedging relationship

= When the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item

164
Q

What is ineffectiveness in hedging relationship?

Ineffectiveness in hedging relationship

= When the change in the fair value or cash flows of the derivative ins________

does not offset the change in fair value or cash flows of the hedged i___

A

What is ineffectiveness in hedging relationship?

Ineffectiveness in hedging relationship

= When the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item

165
Q

What is ineffectiveness in hedging relationship?

A

What is ineffectiveness in hedging relationship?

Ineffectiveness in hedging relationship

= When the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item

166
Q

Measurement of Ineffectiveness

When a___ying hedge accounting an entity is also required to measure any ineff________ that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item).

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument

does not offset the change in fair value or cash flows of the hedged item).

167
Q

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may e__st in the rela_______

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument does not offset the change in fair value or cash flows of the hedged item).

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument does not offset the change in fair value or cash flows of the hedged item).

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

168
Q

Measurement of Ineffectiveness

For a Cash Flow Hedge inef_________ is currently recognized in profit or loss only when there is over hedge

A

Measurement of Ineffectiveness

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge

169
Q

Measurement of Ineffectiveness

For a Cash Flow Hedge ineffectiveness is currently rec____ed in profit or loss only when there is over hedge

A

Measurement of Ineffectiveness

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge

170
Q

Measurement of Ineffectiveness

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is o__r hedge

A

Measurement of Ineffectiveness

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge

171
Q

Measurement of Ineffectiveness

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over he___

and accordingly entities require processes and information to calculate the ineffectiveness accurately

A

Measurement of Ineffectiveness

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge

and accordingly entities require processes and information to calculate the ineffectiveness accurately

172
Q

Measurement of Ineffectiveness

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge

and accordingly entities re_____ processes and information to calculate the ineffectiveness accurately

A

Measurement of Ineffectiveness

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge

and accordingly entities require processes and information to calculate the ineffectiveness accurately

173
Q

Measurement of Ineffectiveness

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge

and accordingly entities require processes and information to calculate the ineff_________ accurately and in the appropriate instances.

A

Measurement of Ineffectiveness

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge

and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

174
Q

Measurement of Ineffectiveness

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge

and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the app_______ instances.

A

Measurement of Ineffectiveness

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge

and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

175
Q

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument does not offset the change in fair value or cash flows of the hedged item).

For a Cash Flow Hedge ineffectiveness is currently recognized in pro___ or l__s only when there is over hedge and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument does not offset the change in fair value or cash flows of the hedged item).

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

176
Q

Measurement of Ineffectiveness

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss o__y when there is o__r hedge and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

A

Measurement of Ineffectiveness

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

177
Q

Measurement of Ineffectiveness

For a Fair Value Hedge, ineff________ is naturally recognized in profit or loss

A

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss

178
Q

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally rec_____ed in profit or loss

A

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss

179
Q

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in p___it or loss

as it is simply the extent to which a perfect offset does not exist

A

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss

as it is simply the extent to which a perfect offset does not exist

180
Q

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss

as it is simply the extent to which a perfect of___t does not exist

A

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss

as it is simply the extent to which a perfect offset does not exist

181
Q

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss

as it is simply the extent to which a perfect offset does not e___t and can occur in an over hedge or under hedge situation.

A

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss

as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

182
Q

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss

as it is simply the extent to which a pe____ offset does not exist and can occur in an over hedge or under hedge situation.

A

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss

as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

183
Q

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss

as it is simply the extent to which a perfect offset does not exist and can oc___ in an over hedge or under hedge situation.

A

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss

as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

184
Q

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss

as it is simply the extent to which a perfect offset does not exist and can occur in an o__r hedge or under hedge situation.

A

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss

as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

185
Q

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss

as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or un___ hedge situation.

A

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss

as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

186
Q

Measurement of Ineffectiveness

For a F___ Va___ Hedge, ineffectiveness is naturally recognized in profit or loss as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

A

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

187
Q

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss as it is simply the extent to which a perfect offset does not exist and can occur in an over he___ or under he___ situation.

A

Measurement of Ineffectiveness

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

188
Q

Me________ of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship (that is, the extent to which the change in the fair value or cash flows of the derivative instrument does not offset the change in fair value or cash flows of the hedged item).

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship (that is, the extent to which the change in the fair value or cash flows of the derivative instrument does not offset the change in fair value or cash flows of the hedged item).

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

189
Q

Measurement of Ine___________

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship (that is, the extent to which the change in the fair value or cash flows of the derivative instrument does not offset the change in fair value or cash flows of the hedged item).

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship (that is, the extent to which the change in the fair value or cash flows of the derivative instrument does not offset the change in fair value or cash flows of the hedged item).

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

190
Q

Measurement of Ineffectiveness

When applying hedge accounting an entity is also re____ed to measure any inef__________ that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument does not offset the change in fair value or cash flows of the hedged item).

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship

(that is, the extent to which the change in the fair value or cash flows of the derivative instrument does not offset the change in fair value or cash flows of the hedged item).

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

191
Q

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship (that is, the extent to which the change in the fair value or cash flows of the derivative instrument does not offset the change in fair value or cash flows of the hedged item).

For a Cash Flow Hedge ineffectiveness is currently rec_____ed in profit or loss only when there is o__r hedge and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship (that is, the extent to which the change in the fair value or cash flows of the derivative instrument does not offset the change in fair value or cash flows of the hedged item).

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

192
Q

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship (that is, the extent to which the change in the fair value or cash flows of the derivative instrument does not offset the change in fair value or cash flows of the hedged item).

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss as it is simply the extent to which a perfect offset does not exist and can occur in an ov__ hedge or un___ hedge situation.

A

Measurement of Ineffectiveness

When applying hedge accounting an entity is also required to measure any ineffectiveness that may exist in the relationship (that is, the extent to which the change in the fair value or cash flows of the derivative instrument does not offset the change in fair value or cash flows of the hedged item).

For a Cash Flow Hedge ineffectiveness is currently recognized in profit or loss only when there is over hedge and accordingly entities require processes and information to calculate the ineffectiveness accurately and in the appropriate instances.

For a Fair Value Hedge, ineffectiveness is naturally recognized in profit or loss as it is simply the extent to which a perfect offset does not exist and can occur in an over hedge or under hedge situation.

193
Q

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

It is particularly useful for organizations that experience financial statement volatility today as a result of using derivatives to hedge underlying financial and/or non-financial risks (or expect to do so in the future).

It does nevertheless require a level of expertise to ensure tit is being applied appropriately and an investment of time and resources, both at inception of a hedge relationship and on an on-going basis, to maintain it.

The consequences of not applying hedge accounting appropriately can be significant, resulting in financial statements.

However, when applied appropriately, hedge accounting can result in a better alignment of an organization’s financial reporting and economic realities.

A

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

It is particularly useful for organizations that experience financial statement volatility today as a result of using derivatives to hedge underlying financial and/or non-financial risks (or expect to do so in the future).

It does nevertheless require a level of expertise to ensure tit is being applied appropriately and an investment of time and resources, both at inception of a hedge relationship and on an on-going basis, to maintain it.

The consequences of not applying hedge accounting appropriately can be significant, resulting in financial statements.

However, when applied appropriately, hedge accounting can result in a better alignment of an organization’s financial reporting and economic realities.

194
Q

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

A

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

195
Q

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

It is particularly useful for organizations that experience financial statement vo____lity today

A

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

It is particularly useful for organizations that experience financial statement volatility today

196
Q

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

It is particularly useful for organizations that experience financial statement volatility today

as a result of using der______s to hedge underlying financial and/or non-financial risks

A

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

It is particularly useful for organizations that experience financial statement volatility today

as a result of using derivatives to hedge underlying financial and/or non-financial risks

197
Q

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

It is particularly useful for organizations that experience financial statement volatility today as a result of using derivatives to he___ underlying financial and/or non-financial risks (or expect to do so in the future).

A

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

It is particularly useful for organizations that experience financial statement volatility today as a result of using derivatives to hedge underlying financial and/or non-financial risks (or expect to do so in the future).

198
Q

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

It is particularly useful for organizations that experience financial statement volatility today as a result of using derivatives to hedge un_____ing financial and/or non-financial risks (or expect to do so in the future).

A

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

It is particularly useful for organizations that experience financial statement volatility today as a result of using derivatives to hedge underlying financial and/or non-financial risks (or expect to do so in the future).

199
Q

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

It is particularly useful for organizations that experience financial statement volatility today as a result of using derivatives to hedge underlying financial and/or non-financial ri__s (or expect to do so in the future).

A

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

It is particularly useful for organizations that experience financial statement volatility today as a result of using derivatives to hedge underlying financial and/or non-financial risks (or expect to do so in the future).

200
Q

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

It is particularly useful for organizations that experience financial statement volatility today as a result of using derivatives to hedge underlying financial and/or non-financial risks (or expect to do so in the future).

It does nevertheless req____ a level of expertise to ensure tit is being applied appropriately

A

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

It is particularly useful for organizations that experience financial statement volatility today as a result of using derivatives to hedge underlying financial and/or non-financial risks (or expect to do so in the future).

It does nevertheless require a level of expertise to ensure tit is being applied appropriately

201
Q

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

It is particularly useful for organizations that experience financial statement volatility today as a result of using derivatives to hedge underlying financial and/or non-financial risks (or expect to do so in the future).

It does nevertheless require a level of expertise to ensure tit is being applied app________ly and an investment of time and resources, both at inception of a hedge relationship and on an on-going basis, to maintain it.

A

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

It is particularly useful for organizations that experience financial statement volatility today as a result of using derivatives to hedge underlying financial and/or non-financial risks (or expect to do so in the future).

It does nevertheless require a level of expertise to ensure tit is being applied appropriately and an investment of time and resources, both at inception of a hedge relationship and on an on-going basis, to maintain it.

202
Q

Conclusion

It does nevertheless require a level of expertise to ensure tit is being applied appropriately and an investment of time and resources, both at inc_______ of a hedge relationship and on an on-going basis, to maintain it.

A

Conclusion

It does nevertheless require a level of expertise to ensure tit is being applied appropriately and an investment of time and resources, both at inception of a hedge relationship and on an on-going basis, to maintain it.

203
Q

Conclusion

It does nevertheless require a level of expertise to ensure tit is being applied appropriately and an investment of time and resources, both at inception of a hedge rela_______ and on an on-going basis, to maintain it.

A

Conclusion

It does nevertheless require a level of expertise to ensure tit is being applied appropriately and an investment of time and resources, both at inception of a hedge relationship and on an on-going basis, to maintain it.

204
Q

Conclusion

It does nevertheless require a level of expertise to ensure tit is being applied appropriately and an investment of time and resources, both at inception of a hedge relationship and on an on-go___ basis, to maintain it.

A

Conclusion

It does nevertheless require a level of expertise to ensure tit is being applied appropriately and an investment of time and resources, both at inception of a hedge relationship and on an on-going basis, to maintain it.

205
Q

Conclusion

It does nevertheless require a level of expertise to ensure tit is being applied appropriately and an investment of time and resources, both at inception of a hedge relationship and on an on-going basis, to maintain it.

The consequences of not applying h_____ accounting appropriately can be significant, resulting in financial statements.

A

Conclusion

It does nevertheless require a level of expertise to ensure tit is being applied appropriately and an investment of time and resources, both at inception of a hedge relationship and on an on-going basis, to maintain it.

The consequences of not applying hedge accounting appropriately can be significant, resulting in financial statements.

206
Q

Conclusion

The consequences of not applying hedge accounting appropriately can be significant, resulting in financial statements.

However, when applied app________ly, hedge accounting can result in a better alignment of an organization’s financial reporting and economic realities.

A

Conclusion

The consequences of not applying hedge accounting appropriately can be significant, resulting in financial statements.

However, when applied appropriately, hedge accounting can result in a better alignment of an organization’s financial reporting and economic realities.

207
Q

Conclusion

The consequences of not applying hedge accounting appropriately can be significant, resulting in financial statements.

However, when applied appropriately, hedge accounting can result in a better alig_______ of an organization’s financial reporting and economic realities.

A

Conclusion

The consequences of not applying hedge accounting appropriately can be significant, resulting in financial statements.

However, when applied appropriately, hedge accounting can result in a better alignment of an organization’s financial reporting and economic realities.

208
Q

Conclusion

However, when applied appropriately, he___ accounting can result in a better alignment of an organization’s financial reporting and economic realities.

A

Conclusion

However, when applied appropriately, hedge accounting can result in a better alignment of an organization’s financial reporting and economic realities.

209
Q

Conclusion

However, when applied appropriately, hedge accounting can result in a better alignment of an organization’s financial re____ing and economic realities.

A

Conclusion

However, when applied appropriately, hedge accounting can result in a better alignment of an organization’s financial reporting and economic realities.

210
Q

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

It is particularly useful for organizations that experience financial statement volatility today as a result of using derivatives to hedge underlying financial and/or non-financial risks (or expect to do so in the future).

It does nevertheless require a level of expertise to ensure tit is being applied appropriately and an investment of time and resources, both at inception of a hedge relationship and on an on-going basis, to maintain it.

The consequences of not applying hedge accounting appropriately can be significant, resulting in financial statements.

However, when applied appropriately, hedge accounting can result in a better alignment of an organization’s financial reporting and economic realities.

A

Conclusion

Hedge accounting is a useful financial reporting accommodation that is not as complex and mystifying as it may appear at first glance.

It is particularly useful for organizations that experience financial statement volatility today as a result of using derivatives to hedge underlying financial and/or non-financial risks (or expect to do so in the future).

It does nevertheless require a level of expertise to ensure tit is being applied appropriately and an investment of time and resources, both at inception of a hedge relationship and on an on-going basis, to maintain it.

The consequences of not applying hedge accounting appropriately can be significant, resulting in financial statements.

However, when applied appropriately, hedge accounting can result in a better alignment of an organization’s financial reporting and economic realities.

211
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

*Excerpt from Accounting Standards Codification
Master Glossary

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

*Excerpt from Accounting Standards Codification
Master Glossary

212
Q

What is a fair value hedge?

Fair Value Hedge =

A h_____ of the exposure to changes in the fair value of a recognized asset or liability,

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,

213
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exp_______ to changes in the fair value of a recognized asset or liability,

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,

214
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to cha___s in the fair value of a recognized asset or liability,

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,

215
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the f__r value of a recognized asset or liability,

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,

216
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair va___ of a recognized asset or liability,

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,

217
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a re____ized asset or liability,

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,

218
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized as___ or liability,

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,

219
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or li______y,
or of an unrecognized firm commitment, that are attributable to a particular risk.

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

220
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unr_____ized firm commitment, that are attributable to a particular risk.

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

221
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm com________, that are attributable to a particular risk.

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

222
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attri_______ to a particular risk.

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

223
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular ri__.

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

224
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exp_______ to ch____s in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

225
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the ___ value of a rec_______ed asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

226
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unre_____zed firm com__________, that are attributable to a particular risk.

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

227
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are at_______ble to a particular ri__.

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

228
Q

What is a fair value hedge?

Fair Value Hedge =

A h______ of the ex________ to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

229
Q

What is a fair value hedge?

Fair Value Hedge =

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

230
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to ch______s in the fair va___ of a rec______ed asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

231
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a re____ized asset or liability,
or of an unr_______zed firm commitment, that are attributable to a particular risk.

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

232
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

Fair value hedges protect existing assets, liabilities and firm commitments against changes in fair value.

The exposure to changes in fair value can result from a variety of causes including holding a commodity, being committed to purchase or sell something on predetermined terms or issuing or holding a financial instrument that has a fixed interest rate and maturity.

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,
or of an unrecognized firm commitment, that are attributable to a particular risk.

Fair value hedges protect existing assets, liabilities and firm commitments against changes in fair value.

The exposure to changes in fair value can result from a variety of causes including holding a commodity, being committed to purchase or sell something on predetermined terms or issuing or holding a financial instrument that has a fixed interest rate and maturity.

233
Q

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,

or of an unrecognized firm commitment, that are attributable to a particular risk.

Fair value hedges protect existing assets, liabilities and firm commitments against changes in fair value.

The exposure to changes in fair value can result from a variety of causes including holding a commodity, being committed to purchase or sell something on predetermined terms or issuing or holding a financial instrument that has a fixed interest rate and maturity.

Except for foreign currency fair value hedges,
the derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

Once the derivative unlocks the fixed terms,
the entity’s income statement benefits from favorable changes in the price, rate or index.

However, because of the unlocking of the fixed terms, the entity’s earnings may also be exposed to unfavorable changes.

A

What is a fair value hedge?

Fair Value Hedge =

A hedge of the exposure to changes in the fair value of a recognized asset or liability,

or of an unrecognized firm commitment, that are attributable to a particular risk.

Fair value hedges protect existing assets, liabilities and firm commitments against changes in fair value.

The exposure to changes in fair value can result from a variety of causes including holding a commodity, being committed to purchase or sell something on predetermined terms or issuing or holding a financial instrument that has a fixed interest rate and maturity.

Except for foreign currency fair value hedges,
the derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

Once the derivative unlocks the fixed terms,
the entity’s income statement benefits from favorable changes in the price, rate or index.

However, because of the unlocking of the fixed terms, the entity’s earnings may also be exposed to unfavorable changes.

234
Q

Fair Value Hedge

Except for foreign currency fair value hedges,

the deri______ in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

Once the derivative unlocks the fixed terms,
the entity’s income statement benefits from favorable changes in the price, rate or index.

However, because of the unlocking of the fixed terms, the entity’s earnings may also be exposed to unfavorable changes.

A

Fair Value Hedge

Except for foreign currency fair value hedges,

the derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

Once the derivative unlocks the fixed terms,
the entity’s income statement benefits from favorable changes in the price, rate or index.

However, because of the unlocking of the fixed terms, the entity’s earnings may also be exposed to unfavorable changes.

235
Q

Fair Value Hedge

The derivative in a fair value he___ will unl___ a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

A

Fair Value Hedge

The derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

236
Q

Fair Value Hedge

The derivative in a fair value hedge will unlock a p___e, r___, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

A

Fair Value Hedge

The derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

237
Q

Fair Value Hedge

The derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be f__ed or l___ed from the entity’s income statement perspective.

A

Fair Value Hedge

The derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

238
Q

Fair Value Hedge

The derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s in____ statement perspective.

A

Fair Value Hedge

The derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

239
Q

Fair Value Hedge

The derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

Once the der______ un____s the fixed terms,
the entity’s income statement benefits from favorable changes in the price, rate or index.

A

Fair Value Hedge

The derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

Once the derivative unlocks the fixed terms,
the entity’s income statement benefits from favorable changes in the price, rate or index.

240
Q

Fair Value Hedge

The derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

Once the derivative unlocks the fixed terms,
the entity’s income statement b____its from fa____ble changes in the price, rate or index.

A

Fair Value Hedge

The derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

Once the derivative unlocks the fixed terms,
the entity’s income statement benefits from favorable changes in the price, rate or index.

241
Q

Fair Value Hedge

The derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

Once the derivative unlocks the fixed terms,
the entity’s income statement benefits from favorable ch___es in the p___e, rate or index.

A

Fair Value Hedge

The derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

Once the derivative unlocks the fixed terms,
the entity’s income statement benefits from favorable changes in the price, rate or index.

242
Q

Fair Value Hedge

The derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

Once the derivative unlocks the fixed terms,
the entity’s income statement benefits from favorable changes in the price, rate or index.

However, because of the unlocking of the fixed terms, the entity’s e___ings may also be ex____d to unfavorable changes.

A

Fair Value Hedge

The derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

Once the derivative unlocks the fixed terms,
the entity’s income statement benefits from favorable changes in the price, rate or index.

However, because of the unlocking of the fixed terms, the entity’s earnings may also be exposed to unfavorable changes.

243
Q

Fair Value Hedge

The derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

Once the derivative unlocks the fixed terms,
the entity’s income statement benefits from favorable changes in the price, rate or index.

However, because of the unlocking of the fixed terms, the entity’s earnings may also be exposed to unf_____ble changes.

A

Fair Value Hedge

The derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

Once the derivative unlocks the fixed terms,
the entity’s income statement benefits from favorable changes in the price, rate or index.

However, because of the unlocking of the fixed terms, the entity’s earnings may also be exposed to unfavorable changes.

244
Q

Fair Value Hedge

The derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

Once the derivative unlocks the fixed terms,
the entity’s income statement benefits from favorable changes in the price, rate or index.

However, because of the unlocking of the fixed terms, the entity’s earnings may also be exposed to unfavorable ch___es.

A

Fair Value Hedge

The derivative in a fair value hedge will unlock a price, rate, or index that would otherwise be fixed or locked from the entity’s income statement perspective.

Once the derivative unlocks the fixed terms,
the entity’s income statement benefits from favorable changes in the price, rate or index.

However, because of the unlocking of the fixed terms, the entity’s earnings may also be exposed to unfavorable changes.

245
Q

Fair Value Hedge

“The derivative in a fair value hedge will unlock a price, rate or index that would otherwise be fixed or locked from the entity’s income statement perspective.*”

*Fair value hedges of firm commitments denominated in a foreign currency, actually LOCK in an exchange rate rather than unlock the exchange rate.

However, the purpose of locking in the exchange rate is to protect the entity while it is “locked” into some other cost, price, rate or index,

such as a contract to purchase a fixed quantity of inventory at a fixed price denominated in a foreign currency.

Because the entity cannot avoid the fixed price, it is exposed to changes in the foreign currency exchange rate.

Thus, even in this hedging relationship, the derivative is protecting the entity from fixed prices, costs, rates or indexes.

A

Fair Value Hedge

“The derivative in a fair value hedge will unlock a price, rate or index that would otherwise be fixed or locked from the entity’s income statement perspective.*”

*Fair value hedges of firm commitments denominated in a foreign currency, actually LOCK in an exchange rate rather than unlock the exchange rate.

However, the purpose of locking in the exchange rate is to protect the entity while it is “locked” into some other cost, price, rate or index,

such as a contract to purchase a fixed quantity of inventory at a fixed price denominated in a foreign currency.

Because the entity cannot avoid the fixed price, it is exposed to changes in the foreign currency exchange rate.

Thus, even in this hedging relationship, the derivative is protecting the entity from fixed prices, costs, rates or indexes.

246
Q

Fair Value Hedge

“The derivative in a fair value hedge will un____ a price, rate or index that would otherwise be fixed or locked from the entity’s income statement perspective.*”

*Fair value hedges of firm commitments denominated in a foreign currency, actually LOCK in an exchange rate rather than unlock the exchange rate.

A

Fair Value Hedge

“The derivative in a fair value hedge will unlock a price, rate or index that would otherwise be fixed or locked from the entity’s income statement perspective.*”

*Fair value hedges of firm commitments denominated in a foreign currency, actually LOCK in an exchange rate rather than unlock the exchange rate.

247
Q

Fair Value Hedge

“The derivative in a fair value hedge will unlock a price, rate or index that would otherwise be fixed or locked from the entity’s income statement perspective.*”

*Fair value hedges of firm commitments denominated in a for____ currency, actually LOCK in an exchange rate rather than unlock the exchange rate.

A

Fair Value Hedge

“The derivative in a fair value hedge will unlock a price, rate or index that would otherwise be fixed or locked from the entity’s income statement perspective.*”

*Fair value hedges of firm commitments denominated in a foreign currency, actually LOCK in an exchange rate rather than unlock the exchange rate.

248
Q

Fair Value Hedge

“The derivative in a fair value hedge will unlock a price, rate or index that would otherwise be fixed or locked from the entity’s income statement perspective.*”

*Fair value hedges of firm commitments denominated in a foreign currency, actually LOCK in an exchange rate rather than unlock the exchange rate.

However, the purpose of locking in the exchange rate is to pro____ the entity while it is “locked” into some other cost, price, rate or index,

A

Fair Value Hedge

“The derivative in a fair value hedge will unlock a price, rate or index that would otherwise be fixed or locked from the entity’s income statement perspective.*”

*Fair value hedges of firm commitments denominated in a foreign currency, actually LOCK in an exchange rate rather than unlock the exchange rate.

However, the purpose of locking in the exchange rate is to protect the entity while it is “locked” into some other cost, price, rate or index,

249
Q

Fair Value Hedge

“The derivative in a fair value hedge will unlock a price, rate or index that would otherwise be fixed or locked from the entity’s income statement perspective.*”

*Fair value hedges of firm commitments denominated in a foreign currency, actually LOCK in an exchange rate rather than unlock the exchange rate.

However, the purpose of locking in the exchange rate is to protect the entity while it is “l___ed” into some other cost, price, rate or index,

A

Fair Value Hedge

“The derivative in a fair value hedge will unlock a price, rate or index that would otherwise be fixed or locked from the entity’s income statement perspective.*”

*Fair value hedges of firm commitments denominated in a foreign currency, actually LOCK in an exchange rate rather than unlock the exchange rate.

However, the purpose of locking in the exchange rate is to protect the entity while it is “locked” into some other cost, price, rate or index,

250
Q

Fair Value Hedge

“The derivative in a fair value hedge will unlock a price, rate or index that would otherwise be fixed or locked from the entity’s income statement perspective.*”

*Fair value hedges of firm commitments denominated in a foreign currency, actually LOCK in an exchange rate rather than unlock the exchange rate.

However, the purpose of locking in the exchange rate is to protect the entity while it is “locked” into some other c___, price, rate or index,

such as a contract to purchase a fixed quantity of inventory at a fixed price denominated in a foreign currency.

A

Fair Value Hedge

“The derivative in a fair value hedge will unlock a price, rate or index that would otherwise be fixed or locked from the entity’s income statement perspective.*”

*Fair value hedges of firm commitments denominated in a foreign currency, actually LOCK in an exchange rate rather than unlock the exchange rate.

However, the purpose of locking in the exchange rate is to protect the entity while it is “locked” into some other cost, price, rate or index,

such as a contract to purchase a fixed quantity of inventory at a fixed price denominated in a foreign currency.

251
Q

Fair Value Hedge

“The derivative in a fair value hedge will unlock a price, rate or index that would otherwise be fixed or locked from the entity’s income statement perspective.*”

*Fair value hedges of firm commitments denominated in a foreign currency, actually LOCK in an exchange rate rather than unlock the exchange rate.

However, the purpose of locking in the exchange rate is to protect the entity while it is “locked” into some other cost, price, rate or index,

such as a contract to purchase a f__ed quantity of inventory at a fixed price denominated in a foreign currency.

A

Fair Value Hedge

“The derivative in a fair value hedge will unlock a price, rate or index that would otherwise be fixed or locked from the entity’s income statement perspective.*”

*Fair value hedges of firm commitments denominated in a foreign currency, actually LOCK in an exchange rate rather than unlock the exchange rate.

However, the purpose of locking in the exchange rate is to protect the entity while it is “locked” into some other cost, price, rate or index,

such as a contract to purchase a fixed quantity of inventory at a fixed price denominated in a foreign currency.

252
Q

Fair Value Hedge

“The derivative in a fair value hedge will unlock a price, rate or index that would otherwise be fixed or locked from the entity’s income statement perspective.*”

*Fair value hedges of firm commitments denominated in a foreign currency, actually LOCK in an exchange rate rather than unlock the exchange rate.

However, the purpose of locking in the exchange rate is to protect the entity while it is “locked” into some other cost, price, rate or index,

such as a contract to purchase a fixed quantity of inventory at a fixed p___e denominated in a foreign currency.

A

Fair Value Hedge

“The derivative in a fair value hedge will unlock a price, rate or index that would otherwise be fixed or locked from the entity’s income statement perspective.*”

*Fair value hedges of firm commitments denominated in a foreign currency, actually LOCK in an exchange rate rather than unlock the exchange rate.

However, the purpose of locking in the exchange rate is to protect the entity while it is “locked” into some other cost, price, rate or index,

such as a contract to purchase a fixed quantity of inventory at a fixed price denominated in a foreign currency.

253
Q

Fair Value Hedge

“The derivative in a fair value hedge will unlock a price, rate or index that would otherwise be fixed or locked from the entity’s income statement perspective.*”

*Fair value hedges of firm commitments denominated in a foreign currency, actually LOCK in an exchange rate rather than unlock the exchange rate.

However, the purpose of locking in the exchange rate is to protect the entity while it is “locked” into some other cost, price, rate or index,

such as a contract to purchase a fixed quantity of inventory at a fixed price denominated in a foreign currency.

Because the entity cannot avoid the fixed price, it is exposed to changes in the foreign currency exchange rate.

Thus, even in this hedging relationship, the deri_____ is pro____ing the entity from fixed prices, costs, rates or indexes.

A

Fair Value Hedge

“The derivative in a fair value hedge will unlock a price, rate or index that would otherwise be fixed or locked from the entity’s income statement perspective.*”

*Fair value hedges of firm commitments denominated in a foreign currency, actually LOCK in an exchange rate rather than unlock the exchange rate.

However, the purpose of locking in the exchange rate is to protect the entity while it is “locked” into some other cost, price, rate or index,

such as a contract to purchase a fixed quantity of inventory at a fixed price denominated in a foreign currency.

Because the entity cannot avoid the fixed price, it is exposed to changes in the foreign currency exchange rate.

Thus, even in this hedging relationship, the derivative is protecting the entity from fixed prices, costs, rates or indexes.

254
Q

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand, and an entity that has an investment in an available-for-sale fixed-rate debt instrument could enter into an interest rate swap to synthetically convert the fixed-rate debt instrument to a variable-rate debt instrument.

Fair value hedges protect against exposures to changes in the fair value of a recognized asset (e.g., inventory, fixed-rate notes receivable, fixed-rate bond), liability (e.g., fixed-rate debt issuance), or unrecognized firm commitment.

A

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand, and an entity that has an investment in an available-for-sale fixed-rate debt instrument could enter into an interest rate swap to synthetically convert the fixed-rate debt instrument to a variable-rate debt instrument.

Fair value hedges protect against exposures to changes in the fair value of a recognized asset (e.g., inventory, fixed-rate notes receivable, fixed-rate bond), liability (e.g., fixed-rate debt issuance), or unrecognized firm commitment.

255
Q

Fair Value Hedge

Examples of fair value hedges of as___s work similarly.

A

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument

could enter into an interest rate swap

to synthetically convert the fixed-rate debt instrument to a variable-rate debt instrument.

256
Q

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns in_____ry could enter into a fair value hedge

A

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge

257
Q

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair v___e he__e to protect the value of its inventory

A

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory

258
Q

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the val__ of its inv____ry on hand,

A

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

259
Q

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to pro____ the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument

A

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument

260
Q

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an inve_______ in an available-for-sale fixed-rate debt instrument

could enter into an interest rate swap

A

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument

could enter into an interest rate swap

261
Q

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate d__t instrument

could enter into an interest rate swap

A

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument

could enter into an interest rate swap

262
Q

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt inst_______

could enter into an interest rate swap

A

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument

could enter into an interest rate swap

263
Q

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument

could enter into an interest rate s__p

to synthetically convert the fixed-rate debt instrument

A

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument

could enter into an interest rate swap

to synthetically convert the fixed-rate debt instrument

264
Q

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument

could enter into an interest rate swap

to synthetically con___t the fixed-rate debt instrument to a variable-rate debt instrument.

A

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument

could enter into an interest rate swap

to synthetically convert the fixed-rate debt instrument to a variable-rate debt instrument.

265
Q

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument

could enter into an interest rate swap

to synthetically convert the fixed-rate debt inst________ to a variable-rate debt instrument.

A

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument

could enter into an interest rate swap

to synthetically convert the fixed-rate debt instrument to a variable-rate debt instrument.

266
Q

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument

could enter into an interest rate swap

to synthetically convert the f__ed-rate debt instrument to a variable-rate debt instrument.

A

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument

could enter into an interest rate swap

to synthetically convert the fixed-rate debt instrument to a variable-rate debt instrument.

267
Q

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument

could enter into an interest rate swap

to synthetically convert the fixed-rate debt instrument to a v____ble-rate debt instrument.

A

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument

could enter into an interest rate swap

to synthetically convert the fixed-rate debt instrument to a variable-rate debt instrument.

268
Q

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns in______y could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument could enter into an interest rate swap to synthetically convert the fixed-rate debt instrument to a variable-rate debt instrument.

A

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument could enter into an interest rate swap to synthetically convert the fixed-rate debt instrument to a variable-rate debt instrument.

269
Q

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an inve______ in an available-for-sale fixed-rate debt instrument could enter into an interest rate swap to synthetically convert the fixed-rate debt instrument to a variable-rate debt instrument.

A

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument could enter into an interest rate swap to synthetically convert the fixed-rate debt instrument to a variable-rate debt instrument.

270
Q

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument could enter into an interest rate swap to synthetically con___t the fixed-rate debt instrument to a variable-rate debt instrument.

Fair value hedges protect against exposures to changes in the fair value of a recognized asset (e.g., inventory, fixed-rate notes receivable, fixed-rate bond), liability (e.g., fixed-rate debt issuance), or unrecognized firm commitment.

A

Fair Value Hedge

Examples of fair value hedges of assets work similarly.

An entity that owns inventory could enter into a fair value hedge to protect the value of its inventory on hand,

and an entity that has an investment in an available-for-sale fixed-rate debt instrument could enter into an interest rate swap to synthetically convert the fixed-rate debt instrument to a variable-rate debt instrument.

Fair value hedges protect against exposures to changes in the fair value of a recognized asset (e.g., inventory, fixed-rate notes receivable, fixed-rate bond), liability (e.g., fixed-rate debt issuance), or unrecognized firm commitment.

271
Q

Fair Value Hedge

Fair value hedges pro____ against exposures to changes in the fair value

A

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value

272
Q

Fair Value Hedge

Fair value hedges protect against exp____es to changes in the fair value

A

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value

273
Q

Fair Value Hedge

Fair value hedges protect against exposures to ch___es in the fair value of a recognized asset

A

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized asset

274
Q

Fair Value Hedge

Fair value hedges protect against exposures to changes in the f__r value of a recognized asset, liability, or unrecognized firm commitment.

A

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized asset, liability,
or unrecognized firm commitment.

275
Q

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a re____ized asset, liability, or unrecognized firm commitment.

A

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized asset, liability, or unrecognized firm commitment.

276
Q

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized as___, liability, or unrecognized firm commitment.

A

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized asset, liability, or unrecognized firm commitment.

277
Q

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized asset, lia___ity, or unrecognized firm commitment.

A

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized asset, liability, or unrecognized firm commitment.

278
Q

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized asset, liability, or unre____ized firm commitment.

A

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized asset, liability, or unrecognized firm commitment.

279
Q

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized asset, liability, or unrecognized firm commit____.

A

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized asset, liability, or unrecognized firm commitment.

280
Q

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized

asset (e.g., inv______y, fixed-rate notes receivable, fixed-rate bond),

A

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized

asset (e.g., inventory, fixed-rate notes receivable, fixed-rate bond),

281
Q

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized

asset (e.g., inventory, fixed-rate n__es receivable, fixed-rate bond),

A

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized

asset (e.g., inventory, fixed-rate notes receivable, fixed-rate bond),

282
Q

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized

asset (e.g., inventory, fixed-rate notes re______ble, fixed-rate bond),

A

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized

asset (e.g., inventory, fixed-rate notes receivable, fixed-rate bond),

283
Q

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized

asset (e.g., inventory, fixed-rate notes receivable, fixed-rate b__d),

liability (e.g., fixed-rate debt issuance),

A

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized

asset (e.g., inventory, fixed-rate notes receivable, fixed-rate bond),

liability (e.g., fixed-rate debt issuance),

284
Q

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized

asset (e.g., inventory, fixed-rate notes receivable, fixed-rate bond),

liability (e.g., fixed-rate d__t issuance),

or unrecognized firm commitment.

A

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized

asset (e.g., inventory, fixed-rate notes receivable, fixed-rate bond),

liability (e.g., fixed-rate debt issuance),

or unrecognized firm commitment.

285
Q

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized

asset (e.g., inventory, fixed-rate notes receivable, fixed-rate bond),

liability (e.g., fixed-rate debt issuance),

or unrecognized firm commit____.

A

Fair Value Hedge

Fair value hedges protect against exposures to changes in the fair value of a recognized

asset (e.g., inventory, fixed-rate notes receivable, fixed-rate bond),

liability (e.g., fixed-rate debt issuance),

or unrecognized firm commitment.

286
Q

EY

How we see it?

The fact that an entity would be locked into a fixed price, cost, rate or index absent the hedge

is what distinguishes fair value hedges from cash flow hedges.

Identifying whether the entity is locked in to a fixed exposure is an important step in determining whether the derivative represents a fair value hedge or a cash flow hedge.

This distinction is important because the accounting for each type of hedge is different.

A

EY

How we see it?

The fact that an entity would be locked into a fixed price, cost, rate or index absent the hedge

is what distinguishes fair value hedges from cash flow hedges.

Identifying whether the entity is locked in to a fixed exposure is an important step in determining whether the derivative represents a fair value hedge or a cash flow hedge.

This distinction is important because the accounting for each type of hedge is different.

287
Q

EY

How we see it?

The fact that an entity would be lo__ed into a fixed price, cost, rate or index absent the hedge

A

EY

How we see it?

The fact that an entity would be locked into a fixed price, cost, rate or index absent the hedge

288
Q

EY

How we see it?

The fact that an entity would be locked into a FIXED price, cost, rate or index absent the h___e

is what distinguishes Fair Value Hedges from Cash flow Hedges.

A

EY

How we see it?

The fact that an entity would be locked into a FIXED price, cost, rate or index absent the hedge

is what distinguishes Fair Value Hedges from Cash flow Hedges.

289
Q

EY

How we see it?

The fact that an entity would be locked into a FIXED price, cost, rate or index absent the hedge

is what dis______hes Fair Value Hedges from Cash flow Hedges.

A

EY

How we see it?

The fact that an entity would be locked into a FIXED price, cost, rate or index absent the hedge

is what distinguishes Fair Value Hedges from Cash flow Hedges.

290
Q

EY

How we see it?

The fact that an entity would be locked into a FIXED price, cost, rate or index absent the hedge

is what distinguishes F__r Value Hedges from C__h flow Hedges.

A

EY

How we see it?

The fact that an entity would be locked into a FIXED price, cost, rate or index absent the hedge

is what distinguishes Fair Value Hedges from Cash flow Hedges.

291
Q

EY

How we see it?

The fact that an entity would be locked into a FIXED price, cost, rate or index absent the hedge

is what distinguishes Fair Value Hedges from Cash flow Hedges.

Identifying whether the entity is locked in to a fixed exposure is an important step in d_____ining whether the derivative represents a fair value hedge or a cash flow hedge.

A

EY

How we see it?

The fact that an entity would be locked into a FIXED price, cost, rate or index absent the hedge

is what distinguishes Fair Value Hedges from Cash flow Hedges.

Identifying whether the entity is locked in to a fixed exposure is an important step in determining whether the derivative represents a fair value hedge or a cash flow hedge.

292
Q

EY

How we see it?

The fact that an entity would be locked into a FIXED price, cost, rate or index absent the hedge

is what distinguishes Fair Value Hedges from Cash flow Hedges.

Identifying whether the entity is locked in to a fixed exposure is an important step in determining whether the der______ represents a fair value hedge or a cash flow hedge.

This distinction is important because the accounting for each type of hedge is different.

A

EY

How we see it?

The fact that an entity would be locked into a FIXED price, cost, rate or index absent the hedge

is what distinguishes Fair Value Hedges from Cash flow Hedges.

Identifying whether the entity is locked in to a fixed exposure is an important step in determining whether the derivative represents a fair value hedge or a cash flow hedge.

This distinction is important because the accounting for each type of hedge is different.

293
Q

EY

How we see it?

The fact that an entity would be locked into a FIXED price, cost, rate or index absent the hedge

is what distinguishes Fair Value Hedges from Cash flow Hedges.

Identifying whether the entity is locked in to a fixed exposure is an important step in determining whether the derivative represents a fair value hedge or a cash flow hedge.

This distinction is important because the acc___ting for each type of hedge is different.

A

EY

How we see it?

The fact that an entity would be locked into a FIXED price, cost, rate or index absent the hedge

is what distinguishes Fair Value Hedges from Cash flow Hedges.

Identifying whether the entity is locked in to a fixed exposure is an important step in determining whether the derivative represents a fair value hedge or a cash flow hedge.

This distinction is important because the accounting for each type of hedge is different.

294
Q

EY

How we see it?

The fact that an entity would be locked into a FIXED price, cost, rate or index absent the hedge

is what distinguishes Fair Value Hedges from Cash flow Hedges.

Identifying whether the entity is locked in to a fixed exposure is an important step in determining whether the derivative represents a fair value hedge or a cash flow hedge.

This distinction is important because the accounting for each type of hedge is diff_______.

A

EY

How we see it?

The fact that an entity would be locked into a FIXED price, cost, rate or index absent the hedge

is what distinguishes Fair Value Hedges from Cash flow Hedges.

Identifying whether the entity is locked in to a fixed exposure is an important step in determining whether the derivative represents a fair value hedge or a cash flow hedge.

This distinction is important because the accounting for each type of hedge is different.

295
Q

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement specifies all significant terms, including

 - the quantity to be exchanged, 
 - the fixed price and 
 - the timing of the transaction.

The fixed price may be expressed as a specified amount of an entity’s functional currency or of a foreign currency.

It may also be expressed as a specified interest rate or specified effective yield.

• The agreement includes a disincentive for nonperformance that is sufficiently large to make performance probable.

A

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement specifies all significant terms, including

 - the quantity to be exchanged, 
 - the fixed price and 
 - the timing of the transaction.

The fixed price may be expressed as a specified amount of an entity’s functional currency or of a foreign currency.

It may also be expressed as a specified interest rate or specified effective yield.

• The agreement includes a disincentive for nonperformance that is sufficiently large to make performance probable.

296
Q

Firm commitments

ASC 815 defines a firm com________ as

an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

A

Firm commitments

ASC 815 defines a firm commitment as

an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

297
Q

Firm commitments

ASC 815 defines a firm commitment as

an agree____ with an unrelated party,

A

Firm commitments

ASC 815 defines a firm commitment as

an agreement with an unrelated party,

298
Q

Firm commitments

ASC 815 defines a firm commitment as

an agreement with an un____ed party, binding on both parties,

A

Firm commitments

ASC 815 defines a firm commitment as

an agreement with an unrelated party, binding on both parties,

299
Q

Firm commitments

ASC 815 defines a firm commitment as

an agreement with an unrelated party, bi__ing on both parties, and usually legally enforceable,

A

Firm commitments

ASC 815 defines a firm commitment as

an agreement with an unrelated party, binding on both parties, and usually legally enforceable,

300
Q

Firm commitments

ASC 815 defines a firm commitment as

an agreement with an unrelated party, binding on both parties, and usually le___ly enforceable, with the following characteristics:

A

Firm commitments

ASC 815 defines a firm commitment as

an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

301
Q

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement specifies all significant t__ms, including

 - the quantity to be exchanged, 
 - the fixed price and 
 - the timing of the transaction.
A

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement specifies all significant terms, including

 - the quantity to be exchanged, 
 - the fixed price and 
 - the timing of the transaction.
302
Q

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement specifies all significant terms, including

 - the q\_\_\_tity to be exchanged, 
 - the fixed price and 
 - the timing of the transaction.
A

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement specifies all significant terms, including

 - the quantity to be exchanged, 
 - the fixed price and 
 - the timing of the transaction.
303
Q

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement specifies all significant terms, including

 - the quantity to be exchanged, 
 - the f\_\_ed price and 
 - the timing of the transaction.
A

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement specifies all significant terms, including

 - the quantity to be exchanged, 
 - the fixed price and 
 - the timing of the transaction.
304
Q

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement specifies all significant terms, including

 - the quantity to be exchanged, 
 - the fixed price and 
 - the t\_\_ing of the transaction.
A

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement specifies all significant terms, including

 - the quantity to be exchanged, 
 - the fixed price and 
 - the timing of the transaction.
305
Q

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement specifies all significant terms, including

 - the quantity to be exchanged, 
 - the fixed price and 
 - the timing of the transaction.

The fixed pr__e may be expressed as a specified amount of an entity’s functional currency or of a foreign currency.

It may also be expressed as a specified interest rate or specified effective yield.

A

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement specifies all significant terms, including

 - the quantity to be exchanged, 
 - the fixed price and 
 - the timing of the transaction.

The fixed price may be expressed as a specified amount of an entity’s functional currency or of a foreign currency.

It may also be expressed as a specified interest rate or specified effective yield.

306
Q

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement specifies all significant terms, including

 - the quantity to be exchanged, 
 - the fixed price and 
 - the timing of the transaction.

The fixed price may be expressed as a specified amount of an entity’s functional currency or of a foreign currency.

It may also be expressed as a specified inte___t rate or specified effective yield.

A

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement specifies all significant terms, including

 - the quantity to be exchanged, 
 - the fixed price and 
 - the timing of the transaction.

The fixed price may be expressed as a specified amount of an entity’s functional currency or of a foreign currency.

It may also be expressed as a specified interest rate or specified effective yield.

307
Q

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement inc___es a disincentive for nonperformance that is sufficiently large to make performance probable.

A

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement includes a disincentive for nonperformance that is sufficiently large to make performance probable.

308
Q

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement includes a disincentive for nonper_______ that is sufficiently large to make performance probable.

A

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement includes a disincentive for nonperformance that is sufficiently large to make performance probable.

309
Q

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement includes a disincentive for nonperformance that is sufficiently la__e to make performance probable.

A

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement includes a disincentive for nonperformance that is sufficiently large to make performance probable.

310
Q

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement includes a disincentive for nonperformance that is sufficiently large to make perfo_____e probable.

A

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement includes a disincentive for nonperformance that is sufficiently large to make performance probable.

311
Q

Firm commitments

ASC 815 defines a fi__ commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement specifies all significant terms, including

 - the quantity to be exchanged, 
 - the fixed price and 
 - the timing of the transaction.

The fixed price may be expressed as a specified amount of an entity’s functional currency or of a foreign currency.

It may also be expressed as a specified interest rate or specified effective yield.

• The agreement includes a disincentive for nonperformance that is sufficiently large to make performance probable.

A

Firm commitments

ASC 815 defines a firm commitment as an agreement with an unrelated party, binding on both parties, and usually legally enforceable, with the following characteristics:

• The agreement specifies all significant terms, including

 - the quantity to be exchanged, 
 - the fixed price and 
 - the timing of the transaction.

The fixed price may be expressed as a specified amount of an entity’s functional currency or of a foreign currency.

It may also be expressed as a specified interest rate or specified effective yield.

• The agreement includes a disincentive for nonperformance that is sufficiently large to make performance probable.

312
Q

Firm commitment examples:

Examples of contractual commitments satisfying the definition of a firm commitment include:

  • A commodity purchase agreement that provides for a fixed quantity to be delivered at a fixed price with specified timing
  • A contract for the purchase of equipment on a specified delivery date at a fixed price denominated in a foreign currency (In this case, the exchange rate is not fixed, but the foreign currency amount is.)
  • A license or royalty agreement that provides for fixed periodic payments at specific time intervals (A license or royalty agreement that specifies a unit price but does not include a minimum or fixed quantity would not meet the definition of a firm commitment even though future sales that will result in the royalty payments are probable. It may, however, qualify as a forecasted transaction.)
A

Firm commitment examples:

Examples of contractual commitments satisfying the definition of a firm commitment include:

  • A commodity purchase agreement that provides for a fixed quantity to be delivered at a fixed price with specified timing
  • A contract for the purchase of equipment on a specified delivery date at a fixed price denominated in a foreign currency (In this case, the exchange rate is not fixed, but the foreign currency amount is.)
  • A license or royalty agreement that provides for fixed periodic payments at specific time intervals (A license or royalty agreement that specifies a unit price but does not include a minimum or fixed quantity would not meet the definition of a firm commitment even though future sales that will result in the royalty payments are probable. It may, however, qualify as a forecasted transaction.)

CPA AUD Flashcards (62 decks)

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