Suppose that a firm engages in a derivative transaction that qualifies for fair value hedging? The firm

Question:

Suppose that a firm engages in a derivative transaction that qualifies for fair value hedging?
The firm holds a security and hedges it by selling a derivative. During the course of the hedge, the security increases in value by $20,000, whereas the derivative decreases in value by $22,000. Explain what accounting entries would be done and how the firm's earnings and would be affected? Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...