How are derivative contracts generally accounted for?
A)Fair value.
B)Fair value through profit or loss.
C)Amortized cost.
D)Historical cost.

Question

Quizplus · Accepted Answer

Derivative contracts are generally accounted for at fair value through profit or loss, as their value is subject to changes in market conditions. Amortized cost and historical cost are not appropriate methods for accounting for these contracts. Fair value accounting provides more relevant and reliable information to the users of financial statements.

How Are Derivative Contracts Generally Accounted For