Interest rate swaps were used in the chapter to highlight the differences between fair value and cash flow hedge accounting. Explain what type of risk is being hedged when a receive-fixed, pay-variable swap is used to hedge an existing fixed-rate loan.
Answer to relevant QuestionsExplain the circumstances under which fair value hedge accounting should be used and when cash flow hedge accounting should be used.Refer to Exercise E 13-1 and assume that Jol enters into the forward contract to hedge a firm purchase commitment. Repeat parts 1 and 2 under this assumption.Ins makes sophisticated medical equipment. A key component of the equipment is Grade A silver. On May 1, 2011, Ins enters into a firm purchase agreement to buy 1,200,000 troy ounces (equal to 100,000 pounds) of Grade A ...P owns a 60 percent interest in S, and S owns a 40 percent interest in T. Should T be consolidated? If not, how should T be included in the consolidated statements of P and Subsidiaries?P’s separate earnings are $50,000, and S’s separate earnings are $20,000. P owns an 80 percent interest in S, and S owns a 10 percent interest in P. What is the controlling share of consolidated net income?
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