This exercise refers to E6-11. Assume that Outreach hedged the 11,000 (Canadian dollar) receivable by borrowing 11,000
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This exercise refers to E6-11. Assume that Outreach hedged the 11,000 (Canadian dollar) receivable by borrowing 11,000 Canadian dollars from a Canadian bank on January 1, 1997. Demonstrate using journal entries how this transaction removes Outreach’s exposure to the risk of fluctuating exchange rates. Explain.
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