Which of th
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Which of the following arrangement does not satisfy the defintion of a firm commitment but may
satisfy the definition of a forecasted transaction and therefore may qualify for cash flow hedge
accounting.
a. Budgeted purchases or sales of products at market terms
b. A commodity purchase agreement that provides for a fixed quantity to be delivered at a fixed
price with specified timing
C. A contract for the purchase of equipment on a specified delivery date at a fixed price
denominated in a foreign currency (In this case, the exchange rate is not fixed, but the foreign
currency amount is.)
d. A license or royalty agreement that provides for fixed periodic payments at specific time intervals
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