For instruments designated as hedges of forecasted transactions, gains and losses would be reported as components of comprehensive income outside of earnings and recognized in earnings when the forecasted transaction occurs. For all other derivatives, including derivatives designated as trading, derivatives not designated as hedges, and derivatives designated as hedges of other derivatives, gains and losses would be recognized in earnings. The approach would permit derivatives to be designated as hedges of forecasted transactions if certain conditions are met. The extent and form of limitations on what would qualify for designation as a forecasted transaction is an open item. Consistency with an articulated policy for risk management b.
Designation is prospective c.
Designation is formally documented d. Forecasted transaction is specifically identified e. Forecasted transaction is probable f. Forecasted transaction is part of an established business g. Derivative is expected to have cash flows that will offset the changes in cash flows of the hedged transaction.