Question
Why does a cash flow hedge use OCI for the effective portion?
Tap to flip
Answer
It defers gains and losses until the forecasted cash flows affect earnings.
Tap to flip back
Question
Why is retrospective hedge designation not allowed?
Tap to flip
Answer
Hedge accounting requires designation and documentation at inception.
Tap to flip back
Question
What three characteristics define a derivative under ASC 815?
Tap to flip
Answer
Underlying plus notional, little or no initial investment, and net settlement.
Tap to flip back