COMMERCE 4AC3 Chapter Notes - Chapter 10: Hedge Accounting, Forward Contract, Spot Contract

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 4AC3
• Professor: Kevin Veenstra

Document Summary

If both parties agree to operate transaction in cad, foreign transaction is recorded same way as domestic transaction. If agreement requires transaction paid in foreign currency. If transaction is purchase : canadian company will acquire foreign currency in order to pay for import. If transaction is a sale: canadian company will receive foreign currency because of export and will have to sell foreign currency to receive canadian dollars. When value of has changed related to value of foreign currency between a. b. c. Reporting date of financial statements with foreign currency dominated receivable/payable. Date of receipt of payment of foreign currency dominated receivable/payable. Direct rate: quoting in terms of canadian currency e. g. 1usd = sh. 98 cad. Indirect rate: quoting in terms of foreign currency e. g. 1 cad = . 02 usd. Spot rate: rate to exchange currency at particular moment in time.