Old Process:
Old Process PO Creation Invoice Pay Exchange Rate – Driven Change in Project Expense Offsetting Gain or Loss from Hedging Activity PO Date Invoice Posting Invoice Pay Leg 1 exchange-rate driven fluctuation hits the project Leg 2 exchange-rate driven fluctuation hits ATBC, and is booked to a general ledger account Realized hedge booked to project
Old Process:
Old Process Exchange Rate – Driven Change in Project Expense Offsetting Gain or Loss from Hedging Activity PO Date Invoice Posting Invoice Pay Leg 1 exchange-rate driven fluctuation hits the project Leg 2 exchange-rate driven fluctuation hits ATBC, and is booked to a general ledger account Hits Project Expense Hits General Ledger Account Realized hedge booked to project
Old Process:
Old Process €1 = $1 $200,000 Unfavorability in Project Expense $300,000 Favorability to G/L Account €1 = $1.2 €1 = $0.9 Hedging Report: “Unrealized $200,000 Favorable Offset” Realized Hedge: $100,000 Loss Hits Project Impact: $200,000 unfavorable expense hits project when invoice posts + $100,000 loss on realized hedge hits the project = $300,000 unfavorability hits the project _________ $300,000 favorability in project expense booked to general ledger account at invoice pay
Old Process:
Old Process $200,000 Unfavorability in Project Expense $300,000 Favorability to G/L Account Hedging Report: “Unrealized $200,000 Favorable Offset” Realized Hedge: $100,000 Loss Hits Project Impact: $200,000 unfavorable expense hits project at invoice posting $100,000 loss on realized hedge hits the project $300,000 favorability in project expense booked to General Ledger account at invoice pay = No net impact to project $300,000 Favorability to G/L Account $300,000 Favorability to Project Expense €1 = $1 €1 = $1.2 €1 = $0.9 New Process
Slide 6:
$200,000 Unfavorability in Project Expense Hedging Report: “Unrealized $200,000 Favorable Offset” Realized Hedge: $100,000 Loss Hits Project Impact: $200,000 unfavorable expense hits project at invoice posting $100,000 loss on realized hedge hits the project $300,000 favorability in project expense booked to General Ledger account at invoice pay = No net impact to project $300,000 Favorability to Project Expense €1 = $1 €1 = $1.2 €1 = $0.9 New Process Net $100,000 favorability hits project expense $100,000 unfavorability in hedging activity