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Cash 15K
Forward contract (asset) 15K
(net settlement)
Notes *Inventory & cash payment are based *If forward rate increased, increase in
on the spot rate on the actual Accum OCI
transaction date *If forward rate decreased, decrease
*The gain in OCI will remain in OCI in Accum OCI
until it is sold. Once it is sold, there *On the actual transaction date, net
will be a reclassification of OCI to P/L cash settlement should be equal to the
as a reduction to CGS. (If there is a forward rate on Dec 15, 2014.
loss in OCI, then addition to CGS).