Which of the following statements is true concerning forward contracts classified as hedges of an identifiable foreign currency commitment?

Question

Quizplus · Accepted Answer

According to accounting standards, gains or losses from hedges of identifiable foreign currency commitments should be deferred and recognized in the same period as the earnings effect of the underlying transaction. However, any gain or loss resulting from the time period after the transaction date of the commitment should not be deferred. Therefore, statement C is true. Statements A and B are not necessarily true as the amount and time period of the forward contract may exceed the foreign currency commitment. Statement D is not true as statement C is true.

Which of the Following Statements Is True Concerning Forward Contracts