Forex Hedge Accounting Treatment
OANDA’s FXConsulting
for Corporations
31
transaction must be highly probable or likely to occur. Probability requires a significantly greater
likelihood of occurring than ―more likely than not‖. When assessing this requirement of probability,
one should consider factors such as the following:
1. The frequency of similar historical transactions.
2. Your company’s financial ability to complete the transaction.
3. Your company’s operational ability to complete the transaction.
4. Your company’s commitment of resources for the foreign transactions (for example,
manufacturing capacity, access to finished product components).
5. The financial impact if the transaction did not take place.
6. The length of time until a forecasted transaction is projected to take place and the amount of the
forecasted transaction. The longer the time frame and the greater the amount, the less likely the
transaction will occur. Consideration should also be given to the customer’s, suppliers’, or
market’s ability to complete the forecasted transaction.
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