Which one of the following statements is incorrect? Hedge accounting of an existing position no longer applies when:
A) the trader acquires additional exposure in the hedged item.
B) the hedging instrument is sold, terminated or exercised.
C) the hedged item is sold or settled.
D) a hedge fails the effectiveness test.

Question

Quizplus · Accepted Answer

Hedge accounting of an existing position will continue to apply even if the trader acquires additional exposure in the hedged item, as long as the additional exposure is also hedged.

Which One of the Following Statements Is Incorrect? Hedge Accounting