In an FX forward that hedges a foreign currency payable, the accrual of a premium would result in a debit being made to earnings.

Name: In an FX forward that hedges a foreign currency payable, the accrual of a premium would result in a debit being made to earnings.
Brand: Quizplus
Rating: 4.7 (41 reviews)

Question

Quizplus · Accepted Answer

When a premium is received on a forward contract that hedges a foreign currency payable, it represents an inflow of funds that increases the company's earnings. Therefore, a debit is made to earnings to record this increase.

In an FX Forward That Hedges a Foreign Currency Payable