Illustrating Hedged Items

1
NOW
:

AFTE
R
10
MOS.

Exposed Asset

3
S

EXPO
RT
Forward
Contract to
sell 1M$ @
1USD=49Php

Export items 1M $

FC-Payable 1M
$

Accts.
Receivable
1M $

GAIN/LO
SS

Receivable 49M Php

GAIN/LO
SS

Illustrating Hedged Items

1
NOW
:

AFTE
R
10
MOS.

Exposed Liability
IMPOR
T
Forward
Contract to
buy 1M$ @
1USD=49Php

Import items 1M $

FC-Receivable
1M $

Accts.
Payable
1M $

GAIN/LO
SS

Payable 49M Php

GAIN/LO
SS

3
S

Illustrating Hedged Items

1

Firm Commitment
IMPOR
T
Forward
Contract to

NOW
:

buy 1M$ @
1USD=49Php

Commitm
ent to buy
(1M $)
AFTE
R
90
DAYS

FC-Receivable
1M $

Payable 49M Php

GAIN/LO
SS

GAIN/LO
SS

3
S

Illustrating Hedged Items

1

Forecasted Purchases
IMPOR
T
Forward
Contract to

NOW
:

buy 1M$ @
1USD=49Php

Forecaste
d
Purchases

FC-Receivable
1M $

@1M $
AFTE
R
10
MOS.

Payable 49M Php

GAIN/LO
SS

GAIN/LO
SS

3
S

Illustrating Hedged Items

Net
5

Investment in a
Foreign Operation
= accounted for in the same
manner as a cash flow hedge
(Illustration 1)
= effective portion OCI;
3
S
ineffective portion P/L