The accounting treatment given a cash flow hedge of a forecasted transaction continues unless:

Question

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All three statements are true and can lead to a change in the accounting treatment of a cash flow hedge of a forecasted transaction. If the hedging relationship is no longer highly effective, the accounting treatment may need to be adjusted. If the derivative instrument is sold, terminated, or exercised, it can no longer serve as a hedge for the forecasted transaction. Finally, if the derivative instrument is no longer designated as a hedge on a forecasted transaction, the accounting treatment must be reassessed.

The Accounting Treatment Given a Cash Flow Hedge of a Forecasted