Amerco does not enter into a hedge of its export sale until it actually makes the sale. Assume now that on December 1, 2009, Amerco receives and accepts an order from a German customer to deliver goods on March 1, 2010, at a price of 1 million euros. Assume further that under the terms of the sales agreement, Amerco will [...]
Export sales and import purchases are international transactions; they are components of what is called trade. When two parties from different countries enter into a transaction, they must decide which of the two countries' currencies to use to settle the transaction. For example, if a U.S. computer manufacturer sells to a customer in Japan, the parties must decide whether the [...]
SFAS 133 also allows the use of cash flow hedge accounting for foreign currency derivatives used to hedge the cash flow risk associated with a forecasted foreign currency transaction. For hedge accounting to apply, the forecasted transaction must be probable (likely to occur), the hedge must be highly effective in offsetting fluctuations in the cash flow associated with the foreign [...]