Which Situation Below Accurately Describes an Instance of "Hedge Accounting

Multiple Choice

Which situation below accurately describes an instance of "hedge accounting"?

A) A company hedges its investment in a debt security classified as trading. Because of the hedge, changes in the value of the security are reported in other comprehensive income.
B) A company hedges its inventory, normally carried at cost. Because of the hedge, changes in the value of the inventory are reported in income.
C) A company hedging a forecasted purchase of inventory recognizes changes in the value of the inventory in other comprehensive income.
D) A company hedges its inventory, normally carried at cost. Because of the hedge, changes in the value of the inventory are reported in other comprehensive income and the inventory is carried at market value.