Question: What are the differences in accounting for a forward contract
What are the differences in accounting for a forward contract used as (a) a cash flow hedge and (b) a fair value hedge of a foreign currency denominated asset or liability?
Answer to relevant QuestionsWhat are the differences in accounting for a forward contract used as a fair value hedge of (a) a foreign currency denominated asset or liability and (b) a foreign currency firm commitment?Under what conditions can companies use hedge accounting to account for a foreign currency option used to hedge a forecasted foreign currency transaction?What was the net impact on Jensen Company’s 2012 income as a result of this fair value hedge of a firm commitment?a. $–0–.b. $1,319.70 decrease in income.c. $77,980.30 increase in income.d. $78,680.30 increase in ...Bartlett Company, headquartered in Cincinnati, Ohio, has occasional transactions with companies in a foreign country whose currency is the lira. Prepare journal entries for the following transactions in U.S. dollars. Also ...On October 1, 2011, Hanks Company entered into a forward contract to sell 100,000 LCUs in four months (on January 31, 2012) and receive $65,000 in U.S. dollars. Exchange rates for the LCU follow:Hanks’ incremental ...
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