Assuming This Is a Cash Flow Hedge; Prepare Journal Entries

question 59

Essay

Assuming this is a cash flow hedge; prepare journal entries for this sales transaction and forward contract.

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Definitions:

Royalty Contracts

Agreements where the owner of a certain property, patent, copyrighted work, or trademark allows another party to use it in exchange for an agreed upon payment(s) or royalties.

Compensation Contracts

Agreements specifying the terms of pay and benefits for an employee or executive, which may include salary, bonuses, stock options, and other forms of compensation.

Accounting Standards Codification

The collection and organization of the authoritative accounting and reporting standards for U.S. GAAP (Generally Accepted Accounting Principles).

GAAP

Generally Accepted Accounting Principles; a collection of commonly followed accounting rules and standards for financial reporting in the United States.