Refer to Example 6 in the chapter. Assume that Linderman Company is a conventional, walk-in-and-see-it furniture store and is worried that Web-based furniture stores will put it out of business. It has bought the options on FurnitureOnLine.com to hedge the risks that it may have to go out of business if its traditional business becomes unprofitable.

Would this transaction qualify as either a fair-value hedge or a cash-flow hedge?

How would Linderman Company classify the options for accounting purposes?

(Appendix)