Which of the Following Statements Is True About Hedge Accounting

Multiple Choice

Which of the following statements is true about hedge accounting under U.S. GAAP?

A) Companies may choose whether to account for derivatives as cash flow hedges or fair value hedges.
B) If a derivative qualifies as a cash flow hedge, the hedging instrument is adjusted to fair value on each balance sheet date.
C) If a derivative is elected by the company not to be designated as a cash flow hedge, it must be accounted for as such.
D) Hedge accounting is only advantageous when a foreign currency depreciates between the transaction date and the payment date.