Derivatives Hedging Translation Flashcards Preview

CPA Exam > Derivatives Hedging Translation > Flashcards

Flashcards in Derivatives Hedging Translation Deck (12):
1

At cost when acquired re-valued to fair value each period on Balance Sheet.

Derivatives Hedging

2

Recorded on income statement

Derivatives Hedging

3

They are included in Other Comprehensive Income.

Derivatives Hedging

4

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

5

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

6

In Other Comprehensive Income (OCI)

Derivatives Hedging

7

Objectives and Strategies

Context to help investor understand the instrument

Risk Management Policies

Complete List of Hedged Instruments

Derivatives Hedging

8

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

9

The current translation rate as of the balance sheet date is used to report assets and liabilities.

Foreign Currency Translation

10

Use the weighted average exchange rate for the current year.

Foreign Currency Translation

11

Foreign Currency Financial Statements are remeasured into the Reporting Currency (Dollar) using the weighted-average exchange rate

Foreign Currency Translation

12

On the income statement as Other Income.

Foreign Currency Translation