an Unrecognized Currency
Firm Commitment
March 1, 20x5
Firm Commitment 200 FC Transaction Loss
FC Transaction Gain 200
200 FC Receivable from XD
200
To record gain on fair value of
firm commitment. To record a loss on foreign
currency to be received from the
exchange dealer.
Cash Flow Hedge- Hedge
of a Forecasted Transaction
On December 1, 20x4, Dominador Company expects to
purchase a machine for $1000 in United States on March
1, 20x5.The transaction is probable but there is no
binding agreement for this purchase and is to be
denominated in dollars. Thus, transaction and settlement
for the purchase of the machine is March 1, 20x5.
December 1, 20x4