Final answer:
Gains and losses related to cash flow hedges involving anticipated transactions are reported in different financial statements depending on the nature of the hedge.
Step-by-step explanation:
Gains and losses related to cash flow hedges involving anticipated transactions are reported in different financial statements depending on the nature of the hedge.
If the cash flow hedge is effective and meets certain criteria, the gain or loss is initially recognized in accumulated other comprehensive income (AOCI) and subsequently reclassified to earnings in the same period or periods that the hedged item affects earnings.
If the hedge is ineffective, the gain or loss is recognized in earnings immediately. This means it is reported in the income statement as a separate line item.