Final answer:
The deciding factor in IAS or ASC Topic guidelines for gains and losses on derivatives depends on hedge accounting qualification. Derivatives that qualify are treated differently than those that don't. Hedge accounting types like fair value hedge, cash flow hedge, and net investment hedge influence how fair value changes are accounted for.
Step-by-step explanation:
The deciding factor in how IAS (International Accounting Standards) or ASC Topic guidelines (Accounting Standards Codification Topic) require accounting for gains and losses arising from changes in a derivative's fair value depends on whether the derivative qualifies for hedge accounting. If a derivative is designated and qualifies as a hedging instrument in a fair value hedge, cash flow hedge, or net investment hedge, different accounting treatments apply as per the guidelines. Otherwise, the changes in fair value of the derivative are typically recognized in profit or loss immediately. For fair value hedges, changes in the fair value of the derivative and the hedged item attributable to the hedged risk are recognized in profit or loss. In cash flow hedges, the effective part of the gain or loss on the derivative is initially recognized in other comprehensive income (OCI) and later reclassified to profit or loss when the hedged forecasted transaction impacts profit or loss. Meanwhile, the ineffective portion is immediately recognized in profit or loss. Lastly, in net investment hedges, the portion of the gain or loss on the derivative that is determined to be an effective hedge is recognized in OCI and accumulates in the foreign currency translation reserve within equity, while any ineffective portion is recognized in profit or loss immediately.