The gains and losses from cash flow hedges are included in OCI; however, if the hedge is ineffective, the gains and losses are included in current earnings.

Question

Quizplus · Accepted Answer

This statement is true. Gains and losses from cash flow hedges are included in Other Comprehensive Income (OCI), as the primary purpose of cash flow hedges is to manage the risk of cash flow variability in future periods. However, if the hedge is deemed ineffective by the company's accounting policies, the gains and losses from the hedge will be recognized in the income statement as a component of current earnings.

The Gains and Losses from Cash Flow Hedges Are Included