What must a company document under ASPE when using forward contracts for hedging?

Under ASPE (Accounting Standards for Private Enterprises), when a company uses forward contracts for hedging, it is required to document the hedging relationship and its designation. This documentation is crucial as it details how the hedge is intended to offset the related risks in the underlying exposure. It serves to establish the relationship between the hedging instrument (the forward contract) and the hedged item (the exposure being hedged), which is necessary for effective hedge accounting.

Moreover, this documentation supports the assertion that the hedge was entered into to manage risk effectively and that there is a clear understanding of the purpose of the hedge. Proper documentation lays the groundwork for evaluating the hedge's effectiveness over time, although specific effectiveness assessments might not be a requirement under ASPE for all types of hedging relationships.

The other answer choices miss key components of what is necessary for adequate documentation under ASPE. While contract details and cash flow fluctuations are important, they do not encompass the full scope of what needs to be recorded to align with accounting standards for hedging. Projected income from the hedge, while related, does not constitute the necessary documentation for the hedging relationship and its designation.