Which of the following is/are true?
A)Subsequent to the acquisition of a derivative, the firm may report changes in fair value of derivatives in Other Comprehensive Income.
B)Subsequent to the acquisition of a derivative, the firm may report changes in fair value of derivatives but they have no effect on any lines of the statement of cash flows.
C)As the derivative transaction settles, some of the settlements involve net cash flow.
D)As the derivative transaction settles, derivatives with cash settlement can involve cash flows even when the firm uses them as a hedge; often, however, the cash inflow or outflow from the derivative usually offsets another cash outflow or inflow from the other side of the hedge.
E)all of the above

Question

Quizplus · Accepted Answer

All of the given statements are true. After acquiring derivatives, changes in fair value can be reported in Other Comprehensive Income. The changes in fair value of derivatives do not affect any lines of the statement of cash flows. As the derivative transaction settles, there can be a net cash flow involved. Derivatives with cash settlement can involve cash flows even when used as a hedge, but typically offset another cash flow from the other side of the hedge.

Which of the Following Is/are True