A Company Holds Significant Inventories of Soybeans

Multiple Choice

A company holds significant inventories of soybeans. It uses soybean futures to hedge fluctuations in inventory value. If the company uses hedge accounting, the gain or loss on the futures investment is:

A) Shown on the income statement as incurred
B) Shown as a component of other comprehensive income until the inventory is sold
C) Used to adjust the carrying value of the inventory
D) Not reported