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On November 1 , 2 0 2 3 , Cheng Company ( a U . S . - based company ) forecasts the purchase of
On November Cheng Company a USbased company forecasts the purchase of goods from a foreign suppller for yuan. Cheng expects to recelve the goods on April and make immediate payment. On November Cheng enters Into a sixmonth forward contract to buy yuan. The company properly designates the forward contract as a cash flow hedge of a forecasted foreign currency transaction. Forward points are excluded In assessing hedge effectiveness and are amortized to net Income using a straightline method on a monthly basis over the life of the contract. The following US dollarYuan exchange rates apply:
tableForward Rate toDateSpot Rate,April November $$
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