Where is the ineffective portion of a cash-flow hedge recognized on the financial statements?
A)As part of net income
B)As part of other comprehensive income
C)As a separate component of equity
D)It does not appear on the financial statements.

Question

Quizplus · Accepted Answer

The ineffective portion of a cash-flow hedge is recognized in net income because it represents the portion of the hedge that did not effectively offset the cash flows of the hedged item.

Where Is the Ineffective Portion of a Cash-Flow Hedge Recognized