No. of Recommendations: 0
Cash flow hedges, realized or unrealized, only exist in other comprehensive income and the balance sheet, they don't make it to the P&L on the income statement. The only part/percentage of a cash flow hedge that's recognized in the P&L would be the part (if any) that was deemed ineffective.


Sorry, Pete, I didn't fully answer this. So "ineffective" is basically defined as a hedge that gains or loses value to a larger degree than the hedged item. The amount that the hedge gains or loses value over and above the hedged item is classified as the "ineffective" part and transferred to the P&L.

And yes, like you state, once the underlying hedged item is finally sold both it and the closed-out hedge are reclassified into P&L on the income statement.


Mike
Print the post  

Announcements

When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement