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Unformatted text preview: xpenses from these international subsidiaries are translated using the
monthly average exchange rates in effect for the period in which the items occur.
Local currency transactions of international subsidiaries that have the U.S. dollar as the functional currency are remeasured into U.S. dollars using
current rates of exchange for monetary assets and liabilities and historical rates of exchange for non-monetary assets and liabilities. Gains and losses
from remeasurement of monetary assets and liabilities are included in interest and other, net. See Note 6 of Notes to Consolidated Financial
Statements for additional information.
Hedging Instruments — Dell uses derivative financial instruments, primarily forwards, options, and swaps, to hedge certain foreign currency and
interest rate exposures. The relationships between hedging instruments and hedged items are formally documented, as well as the risk management
objectives and strategies for undertaking hedge transactions. Dell does not use derivatives for speculative purposes.
All derivative instruments are recognized as either assets or liabilities on the Consolidated Statements of Financial Position and are measured at fair
value. Hedge accounting is applied based upon the criteria established by accounting guidance for derivative instruments and hedging activities.
Derivatives are assessed for hedge effectiveness both at the onset of the hedge and at regular intervals throughout the life of the derivative. Any
hedge ineffectiveness is recognized currently in earnings as a component of interest and other, net. Dell's hedge portfolio includes derivatives
designated as both cash flow and fair value hedges.
For derivative instruments that are designated as cash flow hedges, hedge ineffectiveness is measured by comparing the cumulative change in the fair
value of the hedge contract with the cumulative change in the fair value of the hedged item, both of which are based on forward rates. Dell records
the effective portion of the gain or loss on the derivative instrument in accumulated other comprehensive income (loss) ("OCI"), as a separate component of stockholders' equity and reclassifies the gain or loss into earnings in the period during which the hedged transaction is recognized in earnings....
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This document was uploaded on 02/22/2014 for the course ACCT 6330 at University of Texas at Dallas, Richardson.
- Spring '11