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In your Required Readings this week, you have a specific anddetailed example of the use of foreign exchange options to hedge ananticipated purchase of inventory using a cash flow hedge (Case 3on pages 575-578) and a specific and detailed example of the use offoreign exchange options to hedge available-for-sale securitiesusing a fair value hedge (Case 2 on pages 571-575).

It is important for you to demonstrate your understanding of theaccounting rules and resulting journal entries that surround theseconcepts, especially for multinational corporations. Corporationsface determining the impact on their financial statements of thesetypes of foreign currency related transactions on almost a dailybasis.

Create your own specific and detailed example of eitherone of these types of foreign exchange options from thebeginning of the use of an option to the end of the use or thesettlement of the option over a three-month period of time.

Show the required journal entries required at each respectivedate during the three-month period, including an explanation of thebasis of each of your journal entry calculations and theauthoritative support for each entry following the US GAAP.

Make sure your journal entries are clear with regards to whichfinancial statement account is affected by each of your journalentries (Balance Sheet, Income Statement, Other ComprehensiveIncome, etc.).

Can you please check ISBN 0078025877 for case