The following situations occur independently.

1. A company knows that it will require a large quantity of euros to pay for some imports in three months. The current exchange rate is satisfactory, and as a result, the company purchases a forward contract committing it to acquire 10 million euros at the current exchange rate in three months' time.

2. A shipping company uses large quantities of fuel to power its ships. Shipping rates are set well in advance of when the actual transportation of goods will take place. The company purchases forward contracts for fuel to ensure that it knows the price it will have to pay for fuel in the future. The contracts are exchange-traded futures.

3. An exporting company exports a significant amount of wheat to China. In order to protect itself against the risk that prices will drop significantly, it uses a just-in-time inventory management system to keep stock at the lowest possible levels.

4. A manufacturing company uses a large quantity of steel in its products. In order to ensure the cost of this steel is known, the company enters into executory contracts where it agrees to take delivery of predetermined quantities of steel at predetermined prices in the future.

5. A company pays a shareholder $5,000 for the right to buy 500 of its own common shares for $25 per share at a future date. The contract is not net settleable.

6. A company enters into a futures contract with a margin account to sell its grain for $2,500.

7. A company issues preferred shares on January 1, 2014, with the following terms and conditions: the shares are redeemable by the company for $50/share on January 1, 2017, and the redemption price doubles every 12 months after January 1, 2017.

8. A company issues debt with detachable warrants. The warrants can be sold separately, and entitle the holder to purchase one share at a future date for a predetermined price.

9. A company issues debt that, at the option of the holder, can be converted into 100,000 common shares of the company.

10. A company issues shares that can be redeemed for a fixed amount at the request of the shareholder at any time.

Instructions

For each of the above situations, describe the type of financial instrument involved, when it should be recognized in the financial statements, the measurement that should be used for accounting purposes, and how gains or losses should be recorded. Assume the company is not using hedge accounting. Be sure to note if there are differences between ASPE and IFRS for any items.