The spot rate was US$1 = C$1.02, on August 1, 2019, Andy Corporation in Canada ordered equipment from an American supplier for US$260,000. Delivery was scheduled for the month of September, with payment in full on delivery.

Upon placing the order, Andy immediately entered into a forward contract with its bank to purchase US$260,000 on September 15, 2019 at the forward rate of US$ = C$1.01.

The equipment was received on September 15, 2019, when the spot rate was US$ = C$0.99.

For accounting purposes, what type of hedge is the forward contract?

a.

A currency hedge

b.

A fair value hedge

c.

A cash flow hedge

d.

A self-sustaining hedge