What is the accounting treatment of changes in fair value on the balance sheet and the income statement? What is the accounting application of a gain or loss on the hedged instrument?
Changes in Fair Value of Assets and Liabilities can be accounted GAAPs(or IFRS) on the Balance Sheet and Income Statement in the following ways:
1. Recognising the Gain/Loss in upward or downward valuation in Income Statement and and recording the Items at Fair Value in Balance Sheet.
OR
2. Recognising the Gain/Loss in upward or downward valuation as OCI(Other Comprehensive Income) and recognising the Items at Fair Value in Balance Sheet.
Gain or loss on the hedged instrument can be accounted as:
1. Recognising the Gain/Loss in Income Statement.
OR
2. Recognising the Gain/Loss as OCI(Other Comprehensive Income).
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