Question: Implement hedge accounting for Delta Air Lines, Inc. to mitigate the risk of fuel price fluctuations. Given the following data: Fuel price exposure: 5 million

  1. Implement hedge accounting for Delta Air Lines, Inc. to mitigate the risk of fuel price fluctuations. Given the following data:
  • Fuel price exposure: 5 million gallons at $2.50 per gallon
  • Hedge contract: Forward contract for 5 million gallons at $2.45 per gallon Calculate the effectiveness of the hedge and prepare the necessary journal entries.

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