3. A U.S. company has payables denominated in euros that it hedges with foreign currency forward purchase contracts. The U.S.


My question:

3. A U.S. company has payables denominated in euros that it hedges with foreign currency forward purchase contracts. The U.S. dollar strengthens against the euro.
Which statement is true?
a. The gain on the payables and the loss on the forward are reported in income.
b. The gain on the payables and the loss on the forward are reported in other comprehensive income.
c. The loss on the payables and the gain on the forward are reported in income.
d. The loss on the payables and the gain on the forward are reported in other comprehensive income.


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