Company A has a derivatives financial instrument that was reported as 5000 liability on the prior period's balance sheet. At the end of the current period. it is determined that a $ 15,000 asset needs to be reported on the balance sheet for this derivative. this is the result of a change in the fair value of the derivatives and the company's position on the derivative. The derivative is hedging a risk associated with an asset shown on the company's balance sheet. The fair value of this asset decreased during the current period by $ 19,000.

Required: 

Determine how the unrealized gain or loss related to the derivative and the associated asset are reported under each of the following circumstances (include the amount )

1) Hedge accounting does not apply to the derivatives 

2) The derivative is accounted for as a fair value hedge 

3) The derivative is accounted for as a cash flow hedge

Answer rating: 100% (QA)

1 If hedge accounting does not apply to the derivatives its accounting will be the same as of simple ... View the full answer