On 1 January 20x2, B Ltd has successfully negotiated a highly probable sale of machinery to an American customer at United States Dollars ("USD") 200,000 on 31 May 20x2. On 1 January 20x2, B Ltd entered into a forward exchange contract to sell USD 200,000 for delivery on 31 May 20x2 for the purpose of risk management to hedge the foreign currency risk associated with the highly probable sale of machinery. What shall be eligible to be designated as the hedged item for the purpose of hedge accounting?

Firm commitment to sell machinery. 

Forward exchange contract to sell USD. 

Highly probable forecast transaction to sell machinery. 

Highly probable forecast transaction to sell USD.

 Firm commitment to sell USD.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below The eligible hedged item for the purpos... View the full answer