Derivatives Hedging Translation Flashcards
At cost when acquired re-valued to fair value each period on Balance Sheet.
Derivatives Hedging
Recorded on income statement
Derivatives Hedging
They are included in Other Comprehensive Income.
Derivatives Hedging
Fair Value Hedge offsets exposure to changes in the value of a recognized asset/liability or of an unrecognized commitment
Initially recorded on Balance Sheet at Fair Value
Gains/Losses recorded on Income Statement
Derivatives Hedging
Cash flow hedges protect from exposure to fluctuations in cash flows.
Initially recorded on Balance Sheet at Fair Value
Gains/Losses going to OCI
Example: A cereal company enters into a futures contract on grain purchases to offset the risk that grain will go up in price.
Derivatives Hedging
In Other Comprehensive Income (OCI)
Derivatives Hedging
Objectives and Strategies
Context to help investor understand the instrument
Risk Management Policies
Complete List of Hedged Instruments
Derivatives Hedging
Fluctuations in that currency cause a gain or loss that must be recognized on the income statement as Income from Continuing Operations
Foreign Currency Translation
The current translation rate as of the balance sheet date is used to report assets and liabilities.
Foreign Currency Translation
Use the weighted average exchange rate for the current year.
Foreign Currency Translation
Foreign Currency Financial Statements are remeasured into the Reporting Currency (Dollar) using the weighted-average exchange rate
Foreign Currency Translation
On the income statement as Other Income.
Foreign Currency Translation
