Foreign Currency Hedges F36-12b

What is the accounting treatment for hedging firm commitments, assuming a fair value hedge?

1. The change in fair value of the forward contract (the hedging instrument(, measured as the change in the forward exchange rate, should be recognized as an increase or decrease in the carrying value of the forward contract with a corresponding gain or loss recognized in net income.
3. The change in fair value of the firm commitment (the hedged item), measured as the change in the forward exchange rate, should be recognized as in increase or decrease in the carrying value of the firm commitment with a corresponding gain or loss recognized.