FC Flashcards
What is direct and indirect exchange?
Direct- measured in 1 FC
Indirect - measured in $1
Where to record the effective portion of the CF hedge?
The effective portion is in OCI
Noneffective portion is in current income
For FC firm commitment, what kind if hedge can be used?
FC and CF are all can be used
What investments that classified as AFS dominated in FC can be hedged?
Investment in equity security and
Investment in debt security
Generally it’s al FV hedge
When investment in FC increase, where to record the increase?
Where to record forward contract increase?
Investment: NI
Hedge: OCI
What type kid foreign operation can be hedged?
Equity investment
Subsidiary to be consolidated
Borrowing from FC to hedge the foreign investment, if the investment in FC is
None for OCI because the FC investment was through translation, which the investment account decrease and the borrowing hedge decrease, if by the same amount, the investment and debt decrease cancel each other in BS, if there is anything more than that, record in NI.
Ie
Investment acct dec. 40k
Borrowing debt decrease 42k
NI gain for 2k
Hedge methods for the recognized assets and liabilities?
Either CF or FV hedge
When hedging the recognized assets what are the two dates’ FC value change need to be offset?
Between dates of asset is recognized and when the asset is fully satisfied
When to use FC translation method and what rates to use?
When FC = FCU
Revenue, expense, and G/L = CR and weighted avg rate can also be used
Monetary Assets and liability = CR
Paid in capital =HC
RE = calculated, no need to translate
Translation G/L record in OCI
When to use re-measurement and what rates to use? Where to record G/L?
Remeasure from FC to FCU to reporting currency
Monetary asset and liability = CR
No monetary items = HR
Ie : anything carried at cost
Prepaid, intangibles, fixed asset and its depreciation, deferred revenues and PIC
Remeasurement adj. report in NI
