Derivatives and hedging

Question 1

When does the Gains or losses in a derivative instrument goes to income statement ?

Answer 1

A) If derivative is designated as Non-Hedging
If you are hedging Fair Value
You already have the asset or liability on your books and you want to protect its fair value from fluctuations.

Question 2

What is the difference between long and short hedge ?

Answer 2

long hedge is for expected cash outflow you expect that the price will go up in the future and you want to hedge that possible loss.

Short hedge you are taking a short position in the future to sell that you expect the cash inflow will go down