General ACCAHedge Accounting

UHN uses titanium as a component of its products. It buys Titanium in dollars. On 1 November 2022 the UHN finance director and production director agreed that, in April 2023, UHN would need to buy a consignment of titanium for $15,000,000. This would ensure that the company would have sufficient titanium for production. In fixing this dollar ($) price of $15,000,000 the finance director worked on the basis of the spot exchange rate of $1.50 = £1, so that cost would be fixed £10,000,000. On 1 November 2022, to ensure it paid £10,000,000 on 30 April 2023 for the titanium, UHN took out a six-month forward contract to buy $15,000,000 and pay £10,000,000. On 1 November 2022, the finance director documented the forward contract as a hedging instrument against the purchase of titanium but was unsure about whether this was a cashflow or fair value hedge. On 31 December 2022, the value of $15,000,000 had depreciated and had an equivalent sterling value of £9,100,000. No adjustments have been made in the draft financial statements for the year ended 31 December 2022 in respect of this forward contract. is this a cashflow hedge if it is are jorunal entries set out like this: DR OCI (loss) 900000 CR Financial liability 900000