Question
6. Which statement is NOT correct? a) In a fair value hedge the entity uses a hedging instrument to hedge against the fluctuation in the
6. Which statement is NOT correct?
a) In a fair value hedge the entity uses a hedging instrument to hedge against the fluctuation in the fair value of the hedged item. The method will be used when the hedged item will be valued at fair value.
b) In a cash flow hedge the entity uses a hedging instrument to hedge against the fluctuation in the Canadian dollar value of future cash flows.
c) The gain or loss on the hedging instrument in a cash flow hedge is initially reported in other comprehensive income and reclassified to profit and loss when the hedged item affects profit.
d) The gain or loss on the hedging instrument in a fair value hedge is initially recognized in other comprehensive income and transferred to profit and loss when the hedged item has be revalued for accounting purposes in accordance with IFRS
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