In the Accounting for Forward Exchange Contracts, Gains and Losses

question 75

Multiple Choice

In the accounting for forward exchange contracts, gains and losses are measured using either spot or forward rates.Which of the following statements concerning measurement of gains and losses is true?

• A)​The gains or losses in a hedge on an exposed asset will be calculated using the spot rate for the asset and the forward rate for the forward contract.
• B)​The contract premium in a hedge of a forecasted transaction will be calculated using the forward rate throughout the contract.
• C)​The gains or losses in a hedge on an identifiable commitment will be calculated using the spot rate for the commitment and the forward rate for the forward contract.
• D)​All of these statements are true.

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