Qualifying Hedges |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Qualifying Hedges | Note 12 – Qualifying Hedges
The functional currency for our operating entities in China is RMB, the currency of the primary economic environment in which they operate. The reporting currency of the Company is the US$. Foreign currency translation adjustments are recorded in the Accumulated other comprehensive income on the Condensed Consolidated Balance Sheets.
The Company borrowed a Bridge Loan in the amount of CNH8,400 million in August 2026. The CNH-denominated borrowing was designated as a net investment hedge to hedge the foreign currency risk associated with the Company’s investments in certain subsidiaries in China. Changes in the carrying value of the borrowing due to fluctuations in the spot exchange rates are recognized in Accumulated other comprehensive income on the Condensed Consolidated Balance Sheets until the sale or substantial liquidation of the underlying net investments. To the extent the net investment hedge is no longer highly effective, hedge accounting will be discontinued prospectively and subsequent changes in carrying value attributable to the change in spot exchange rates will be recognized in the Condensed Consolidated Statements of Income.
A summary of pre-tax gains or losses of foreign currency denominated borrowings designated as net investment hedge is as follows:
No amounts have been excluded from the assessment of hedge effectiveness testing and recognized in our Condensed Consolidated Statement of Income. No amounts have been reclassified from Accumulated other comprehensive income (loss) into our Condensed Consolidated Statement of Income during the quarter and year to date ended September 30, 2026. |
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