_____ A domestic importer enters into an FX forward to hedge an FX payable on an importing transaction. Concerning these two transactions,

Question

Quizplus · Accepted Answer

FX forwards are used to lock in an exchange rate for a transaction at a future date, and accounting treatments can vary based on specific standards (e.g., IFRS, US GAAP). However, the statements provided do not accurately describe the general accounting practices for FX forwards or related payables. Typically, the forward contract itself is marked to market, and changes in value are recognized periodically, not deferred until settlement. The payable is not continuously carried at the forward rate but is initially recognized at the spot rate and subsequently remeasured. The obligation to the FX trader is not necessarily recorded at the spot rate at inception; it's recognized and measured according to the terms of the forward contract.

_____ a Domestic Importer Enters into an FX Forward to Hedge