(A) Assume This Hedge Is Designated as a Cash Flow

question 36

Essay

(A.) Assume this hedge is designated as a cash flow hedge.Prepare the journal entries relating to the transaction and the forward contract.
(B.) Compute the effect on 2018 net income.
(C.) Compute the effect on 2019 net income.

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Definitions:

Unfunded Pension Liability

A pension plan's financial shortfall when the projected retirement benefits obligations exceed the current assets available to fund them.

Long-Term Liability

A financial obligation of a company that is due more than one year in the future.

Current Liability

Financial obligations or debts that a company is expected to pay within one year, including accounts payable, wages, and short-term loans.

Internal Controls

Methods and policies established by a company to guarantee the accuracy of finance and accounting data, encourage responsibility, and deter deceptive practices.