Start learning →

CA Final Hedge Accounting — practice questions — page 2

Explore 40 free Hedge Accounting questions in CA Final Financialreporting. Open each question or exercise to read its content, reference answers and available explanation.

Practise Hedge Accounting with Quill →

Hedge Accounting questions and exercises with answers

Showing questions 31–40 of 40.

After a significant increase in credit risk, how is the impairment allowance measured?Read the answer and worked solution →If credit risk recovers after a lifetime allowance, what happens to the allowance basis?Read the answer and worked solution →Which IFRS 7 reconciliation stage covers credit-impaired financial assets?Read the answer and worked solution →Stage 1 in the allowance reconciliation means which measure?Read the answer and worked solution →The dollar offset method compares which two quantities?Read the answer and worked solution →A dollar offset ratio of 0.8 to 1.25 equals which fractional range?Read the answer and worked solution →A hedging instrument gains 90 while the hedged item loses 100. Is the ratio within the 80:125 rule?Read the answer and worked solution →A derivative loses 70 while the hedged item gains 100. Under the 80:125 rule, is the hedge effective?Read the answer and worked solution →Forward contracts differ from futures in that forwards are what?Read the answer and worked solution →What does a farmer gain by selling forwards on his wheat?Read the answer and worked solution →

Worked practice questions

After a significant increase in credit risk, how is the impairment allowance measured?

  1. Over the next 12 months
  2. Over the full lifetime
  3. For a nil amount
  4. At the original cost
Show answer and solution

Correct answer: B. Over the full lifetime

Following a significant increase in credit risk, the allowance covers all credit losses projected over the instrument's lifetime.

Open this question →

If credit risk recovers after a lifetime allowance, what happens to the allowance basis?

  1. It stays lifetime forever
  2. It is written off fully
  3. It reverts to 12-month losses
  4. It is moved to equity
Show answer and solution

Correct answer: C. It reverts to 12-month losses

When credit risk recovers, the allowance can again be limited to projected credit losses over the following 12 months.

Open this question →

Which IFRS 7 reconciliation stage covers credit-impaired financial assets?

  1. Stage 1
  2. Stage 2
  3. Stage 3
  4. Stage 0
Show answer and solution

Correct answer: C. Stage 3

Stage 1 is 12-month ECL, Stage 2 is lifetime ECL not credit-impaired, and Stage 3 is lifetime ECL credit-impaired.

Open this question →

How to practise

  1. Choose a Hedge Accounting question and try to work out your answer.
  2. Open the question to check the correct answer and read its worked solution.
  3. Continue in the app for bite-sized lessons, explanations and review with Quill. You can start without creating an account.

More Financialreporting topics

Ind AS 116 LeasesInd AS 36 Impairment of Assets and Ind AS 38 Intangible AssetsInd AS 24 Related Party Disclosures and Ind AS 108 Operating SegmentsInd AS 1 Presentation of Financial StatementsInd AS 12 Income TaxesInd AS 113 Fair Value MeasurementInd AS 109 Financial InstrumentsInd AS 23 Borrowing Costs and Ind AS 40 Investment Property