For which type of derivative are changes in the fair value deferred and recognized as an equity adjustment?
A) Fair value hedge
B) Cash flow hedge
C) Operating hedge
D) Notional value hedge

Question

Quizplus · Accepted Answer

Changes in the fair value of a cash flow hedge are deferred and recognized in other comprehensive income as an equity adjustment until they affect earnings. This is done to reduce income statement volatility from the changes in fair value of the hedged item. Fair value, operating, and notional value hedges do not have this deferred recognition.

For Which Type of Derivative Are Changes in the Fair