When accounting for a fair value hedge of a recognized asset or liability, at the end of each period, the firm remeasures the hedged asset or liability to fair value and includes the resulting gain or loss in net income, and the derivative instrument (hedging instrument) to fair value and includes the resulting loss or gain in net income.

Question

Quizplus · Accepted Answer

This is correct as per the accounting rules for fair value hedges. The gains or losses from remeasuring the hedged item and the hedging instrument are recognized in net income.

When Accounting for a Fair Value Hedge of a Recognized