Term Paper-Define and differentiate the differences between a cash flow hedge and a fair value hedge
- Define and differentiate the differences between a cash flow hedge and a fair value hedge, including when (in or under which particular or specific circumstances) a U.S.-based firm would consider using one hedge vs. the other type of hedge. Be specific.
- Summarize the differences that exist, if any, between the US GAAP and IFRS on the accounting for derivatives designated as hedges at the current date you are answering this question.
- Prepare an example of a U.S.-based firm managing an exposed foreign currency net liability position including the journal entries required from the date the U.S. firm purchases goods on account from a foreign-based supplier until the date the purchase is settled, including all journal entries required over a 3-month period of time.
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