alleryStart learning →How does a fair value hedge offset a derivative's P&L?
AGain moved to share capital
BDerivative ignored until settled
CLoss deferred to next year
DHedged item remeasured at fair value
Answer & Solution
Correct answer: D. Hedged item remeasured at fair value
In a fair value hedge the hedged asset or liability is itself remeasured, so its movement offsets the derivative's profit or loss movement.
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