Effective vs ineffective hedges

CFA Level II
#1

What is the difference between the two when recording the hedges in the income statement or in equity?

#2

The effective portion of a cash flow hedge goes to OCI; all others go through the income statement.

#3

Depends on the edge.

All ineffective hedges go to IS.

Fair value hedge: unrealized g/L go to IS

Cash Flow Hedge: Un realized g/l goes to OCI and is later reported in IS when it effects earnings

FX Hedge: teh G/L skips the IS and goes to OCI. treatment of sets the gain or loss recognition in the equity from transalting the Financial statement using CR>

#4

Good catch; I missed the FX hedge under the current rate method…

#5

Thanks, and thank to you S2000 i get my question answered. Analyst forum needs to hire you… lol

#6

Thanks guys, so even for the fx hedge, the ineffective portion of the hedge will go to the income statement?