Which one of the following How should the premium or discount on a forward contract designated as a fair value hedge be accounted for?  

It should be expensed on the maturity date of the forward exchange contract. 

It should be recognized in income over the term of the forward exchange contract. 

It should be recognized in comprehensive income over the term of the forward exchange contract. 

It should be expensed on the inception date of the forward exchange contract.

Best explains how a hedge accomplishes its object to reduce or eliminate exchange rate risk?  

It creates a new payable to match the foreign currency payable. 

It eliminates the foreign currency receivable or payable. 

It creates a new receivable to match the foreign currency receivable. 

It creates a new receivable to match the foreign currency payable

Answer rating: 100% (QA)

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