Foreign Currency Hedges F36-17b

What is the accounting treatment for hedging foreign investment in foreign operations?

1. The change in fair value (in dollars) of both the hedging instrument and the change in the translated value of the balance sheet of the foreign entity should be determined
2. To the extent the change in fair value of the hedging instrument is equal to, or less than, the change in the translated balance sheet, both changes enter into the cumulative translation adjustment
3. To the extent the change in fair value of the hedging instrument is greater than the change in the translated balance sheet, the excess is recognized as a gain and reported in current net income.