Financial reporting classifies derivatives as, Speculative investments, Fair value hedges or. Cash flow hedges. However, firm’s revalue all derivatives to market value each period regardless of the firms reasoning for acquiring the derivatives. In addition to increasing or decreasing the derivative asset or liability, the revaluation amount either affects income immediately or affects other comprehensive income immediately and net income later. For each type of derivate, describe where firms report the revaluation amount on the financial statements in each period.

Financial reporting classifies derivatives as, Speculative investments, Fair value hedges or. Cash flow hedges. However, firm’s revalue all derivatives to market value each period regardless of the firms reasoning for acquiring the derivatives. In addition to increasing or decreasing the derivative asset or liability, the revaluation amount either affects income immediately or affects other comprehensive income immediately and net income later. For each type of derivate, describe where firms report the revaluation amount on the financial statements in each period.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter7: Financial Activities

Section: Chapter Questions

Problem 15QE

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