How should discounts or premiums on forward contracts be treated if the derivative is hedging a foreign-currency-denominated asset?
A. They should be carried on the balance sheet until the contract is completed.
B. They should be included in income in the period the derivative is acquired.
C. They should be amortized over the life of the forward contract.
D. None of the above.
Answer:C
How should discounts or premiums on forward contracts be treated if the derivative is hedging a foreign-currency-denominated asset?
A. They should be carried on the balance sheet until the contract is completed. B. They should be included in income in the period the derivative is acquired. C. They should be amortized over the life of the forward contract. D. None of the above.