A transaction gain or loss on a forward contract entered into as a hedge of an identifiable foreign currency commitment may be:
A) included as a separate item in the stockholders' equity section of the balance sheet.
B) recognized currently in the determination of net income.
C) deferred and included in the measurement of the related foreign currency transaction.
D) none of these.

Question

Quizplus · Accepted Answer

A transaction gain or loss on a forward contract used as a hedge of an identifiable foreign currency commitment can be deferred and included in the measurement of the related foreign currency transaction, aligning the timing of the gain or loss recognition with the underlying transaction.

A Transaction Gain or Loss on a Forward Contract Entered