Tag Archives | Foreign Exchange

Hedges of Foreign Currency Denominated Assets and Liabilities | Accounting

Hedges of foreign currency denominated assets and liabilities, such as accounts receivable and accounts payable, can qualify as either cash flow hedges ox fair value hedges. To qualify as a cash flow hedge, the hedging instrument must completely offset the variability in the cash flows associated with the foreign currency receivable or payable. If the hedging-instrument does not qualify as [...]

By |2018-05-16T07:35:56+00:00May 16, 2018|Foreign Currency|Comments Off on Hedges of Foreign Currency Denominated Assets and Liabilities | Accounting

Hedges of Unrecognized Foreign Currency Firm Commitments | Accounting

Amerco does not enter into a hedge of its export sale until it actually makes the sale. Assume now that on December 1, 2009, Amerco receives and accepts an order from a German customer to deliver goods on March 1, 2010, at a price of 1 million euros. Assume further that under the terms of the sales agreement, Amerco will [...]

By |2018-05-16T07:35:56+00:00May 16, 2018|Foreign Currency|Comments Off on Hedges of Unrecognized Foreign Currency Firm Commitments | Accounting

Foreign Currency Transactions | Foreign Exchange | Accounting

Export sales and import purchases are international transactions; they are components of what is called trade. When two parties from different countries enter into a transaction, they must decide which of the two countries' currencies to use to settle the transaction. For example, if a U.S. computer manufacturer sells to a customer in Japan, the parties must decide whether the [...]

By |2018-05-16T07:35:56+00:00May 16, 2018|Foreign Currency|Comments Off on Foreign Currency Transactions | Foreign Exchange | Accounting
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