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Unformatted text preview: No. 133 - Accounting for Derivative Financial Instruments and Hedging
Activities (SFAS 133), as amended by SFAS 137 and SFAS 138. These standards are
effective for the Company as from January 1, 2001. FAS 133, as amended, requires that all
derivative instruments be recorded on the balance sheet at fair value. Changes in fair value of
derivatives are recorded each period in current earnings or other comprehensive income,
depending on whether the derivative is designated as part of a hedge transaction and, if it is,
depending on the type of hedge transaction. For fair value hedge transactions, in which the
Company is hedging changes in the fair value of an asset, liability or firm commitment, changes
in the fair value of the derivative instrument will generally be offset in the income statement by
changes in the hedged item’s fair value. For cash-flow hedge transactions in which the
Company is hedging the variability of cash flows related to a variable-rate asset, liability, or a
forecasted transaction, changes in the fair value of the derivative instrument will be reported in
other comprehensive income. The gains and losses on the deri...
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- Spring '08