Under U.S.GAAP,what method of amortizing discounts or premiums on forward contracts must be used?
A)effective interest rate method
B)straight line method
C)Companies may choose effective interest rate method or straight line method.
D)Some other method must be used.

Question

Quizplus · Accepted Answer

Under U.S. GAAP, companies have the option to use either the effective interest rate method or straight line method to amortize discounts or premiums on forward contracts. Both methods are commonly used depending on the nature of the contract and the company's accounting policy. Therefore, choice C is the correct answer as it reflects the flexibility allowed under U.S. GAAP.

Under USGAAP,what Method of Amortizing Discounts or Premiums on Forward Contracts