For each of the following, indicate whether the hedge would be classified as a fair value...
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For each of the following, indicate whether the hedge would be classified as a fair value hedge or a cash flow hedge. a. Morningstar locks in a price on a forward contract to buy soybeans over the next 12 months. b. General Motors enters into a foreign currency futures contract on Canadian dollars to hedge its C$200 million bond issuance. c. American Airlines takes delivery of 10 new Boeing jets. The contract was denominated in euros instead of $US.American Airlines will settle the accounts payable in six months. To hedge its exposure, American Airlines buys € denominated futures contracts. d. Apple Inc. has foreign currency options to buy Chinese Yuan to hedge payments to FoxConn, the Chinese company that manufactures Apple products. e. Poole Construction signs a contract to build a soccer stadium in Mexico. The contract is denominated in Mexican pesos. Poole buys foreign currency options to sell Mexican pesos. Classification → + ◆ → For each of the following, indicate whether the hedge would be classified as a fair value hedge or a cash flow hedge. a. Morningstar locks in a price on a forward contract to buy soybeans over the next 12 months. b. General Motors enters into a foreign currency futures contract on Canadian dollars to hedge its C$200 million bond issuance. c. American Airlines takes delivery of 10 new Boeing jets. The contract was denominated in euros instead of $US.American Airlines will settle the accounts payable in six months. To hedge its exposure, American Airlines buys € denominated futures contracts. d. Apple Inc. has foreign currency options to buy Chinese Yuan to hedge payments to FoxConn, the Chinese company that manufactures Apple products. e. Poole Construction signs a contract to build a soccer stadium in Mexico. The contract is denominated in Mexican pesos. Poole buys foreign currency options to sell Mexican pesos. Classification → + ◆ →
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Related Book For
Advanced Accounting
ISBN: 978-0538480284
11th edition
Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Posted Date:
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