Question

Gains or losses on fair value hedges are 

a deferred 

b ignored completely 

c reported directly in net income, 

d reported directly in retained carings, 

e recorded in equity, as part of other comprehensive income. 

Answer 1

Answer:

In case of Fair Value Hedge, the gain or loss are not recognised directly in the profit or loss account. These types of hedges prevent the organisations from unexpected losses. These hedges gains or losses are recorded in equity and other comprensive income statements. No gain or loss recognised in Profit and loss or retained earnings directly.

So correct answer is Option E.

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