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NEW QUESTION: 1
A company enters into a floating rate borrowing with interest due every 12 months over the five year life of the borrowing.
At the same time, the company arranges an interest rate swap to swap the interest profile on the borrowing from floating to fixed rate.
These transactions are designated as a hedge for hedge accounting purposes under IAS 39 Financial Instruments: Recognition and Measurement.
Assuming the hedge is considered to be effective, how would the swap be accounted for 12 months later?
A. The swap would be shown at fair value the statement of financial position and the change in value posted to other comprehensive income.
B. The swap would be shown at nominal value in the statement of financial position and the change in value posted to other comprehensive income.
C. The swap would be shown at fair value the statement of financial position and the change in value posted to profit or loss.
D. The swap would be shown at nominal value in the statement of financial position and the change in value posted to profit or loss.
Answer: A

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