Foreign Currency Hedges F36-13b

What is the accounting treatment for hedging firm commitments, assuming a cash flow hedge?

1. The change in the fair value of the forward exchange contract, measured as the change in the forward exchange rate, should be recognized as an increase or decrease in the contract carrying value with a corresponding loss or gain recognized.
2. To the extent the change in the value of the forward contract (the hedging instrument) is effective in offsetting a decrease (loss) or an increase (gain) in the expected cash flow of the firm commitment, the gain or the loss should be deferred and reported as a component of other comprehensive income.