Discuss contingencies and how they are reported on financial statements. What conditions must be met before a contingency can be charged against income?

For each of the intended uses of the derivatives listed below, explain the accounting in fair value:

o Derivative designated as a hedge of the exposure to changes in the fair value of a recognized asset or liability to or firm commitment

o Derivative designated as a hedge of the exposure to variable cash flows of a forecasted transaction

o Derivative designated as a hedge of the foreign currency exposure of a net investment in a foreign operation

o Derivative not designated as a hedge