Derivatives Flashcards

1
Q

FASB ASC 815-10-25-1 provides for all of the following except:

(a) derivatives should be recognized as assets or liabilities on the financial statements
(b) derivatives should be reported at fair value
(c) derivatives should be reported at cost
(d) gains and losses from hedge transactions are accounted for in different ways, depending on whether is it designated and qualifies for hedge accounting

A

(c) derivatives should be reported at cost

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2
Q

How should gains or losses from fair value hedges be recognized?

A

These hedges protect against the change in values caused by fixed terms, rates or prices. The gains and losses are reported in Income from Continuing Operations

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3
Q

How should gains or losses from cash flow hedges be recognized?

A

Gains and losses are reported in OCI

Cash flow hedges protect against the risk caused by variable prices, costs, rates or terms that cause future cash flows to be uncertain.

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