Which of the following best describes the accounting treatment for derivative instruments not held for purposes of hedging?
A) Record as an asset or liability and recognize changes in fair value in other comprehensive income.
B) Do not record as an asset or liability; record income from the transaction at maturity and recognize in earnings.
C) Record as an asset or liability; recognize changes in fair value currently in earnings.
D) Record as an asset or liability if off-balance sheet risk is material.

Question

Quizplus · Accepted Answer

Derivative instruments not held for purposes of hedging are recorded as assets or liabilities and changes in fair value are recognized currently in earnings. This is in contrast to derivative instruments held for hedging purposes, which are recognized in other comprehensive income.

Which of the Following Best Describes the Accounting Treatment for Derivative