Acct540 Week 7 Case Study

1027 words 5 pages
2013
Results for Thomas Foods 2013
Results for Thomas Foods

This report discusses the issues that Thomas Foods wants researched with examples of how Hedge Accounting could potentially benefit their company. Give examples of hedge accounting usage and if warranted develop a strategy to help the current Controller as well as future personnel properly account hedging assets.

This report discusses the issues that Thomas Foods wants researched with examples of how Hedge Accounting could potentially benefit their company. Give examples of hedge accounting usage and if warranted develop a strategy to help the current Controller as well as future personnel properly account hedging assets.

FACTS:
The goal of Thomas Foods is
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Thomas Foods in turn can account for the expense of buying produce from farmers and in turn utilize the savings when selling to merchants.
The accounting system would not require the huge expense of training the current Controller. Thomas Foods can facilitate budgeting when utilizing the PO system. Thomas Food will know what they are paying and from there decide on resell price. Thomas Foods will show large gains if prices are hiked up due to weather fluctuations and fuel hikes.
AUTHORITIES ON HEDGE ACCOUNTING:
According to the Codification System there is a hedging strategy that is derived from weather fluctuations (Derivatives and Hedging - Weather Derivatives - Implementation Guidance and Illustrations, 2013). However, to account for such a strategy would best be implemented by using cash flow hedging (IFRS Board, 2013). This form of hedge accounting allows the entity to recognize gains and losses at a future time. This format may work if extending gains and losses is beneficial for Thomas Foods. Hedge accounting can easily be too difficult in the accounting aspects. With the Controller for Thomas Foods lacking any knowledge of reporting financials using hedge accounting the best strategy for Thomas Foods might be not to use hedging accounting.
The agricultural hedging concept for farmers works by future selling at present cash prices (Hofstrand & Wisner, 2011). For farmers using the

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