In this module, you have learned how a U.S. importer/exporter that trades with a foreign company will often have to pay/receive foreign currencies, and the different ways it can hedge itself against undesirable volatility of exchange rates with forward contracts. If you have a choice, at which point will you enter into such forward contracts for hedging purposes? i.e. would be prefer hedging against expected cashflow (before you even sign a contract with any foreign company), against firm commitment (after you have signed the contract, but before delivery of goods) or against an account payable or account receivable (after delivery of goods)? Why?

Your assignment will be graded according to your participation and the thoughtfulness of your response. Responses need not be long.

Answer rating: 100% (QA)

Accounting Standards Codification ASC Topic 830 Foreign Currency Matters requires companies to measure assets and liabilities denominated in a foreign currency at their dollar equivalent using the cur... View the full answer