GAAP classifies derivatives as
(a) Speculative investments,
(b) Fair value hedges, or
(c) Cash flow hedges.
However, firms revalue all derivatives to market value each period regardless of the firm’s reason for acquiring the derivatives. In addition to increasing or decreasing the derivative asset or liability, the revaluation amount affects net income immediately or other comprehensive income immediately and net income later. For each type of derivative, describe where firms report the revaluation amount on the financial statements.