Paxco can enter into either (1) three separate hedging
contracts (one for the first six months— the uncommitted
period, one for the following four months^—the firmly
committed period, and one for the remaining three months—
the exposed liability period, or (2) one hedging contract for
the entire thirteen months. If Paxco enters into three separate
hedging contracts, the first contract is accounted for as a cash
flow hedge, the second contract as a fair value hedge, and the
third contract as an undesignated hedge. If instead Paxco
enters into only one hedging contract covering the thirteen
months, it accounts for the hedging contract as (1) a cash
flow hedge for six months. (2) a fair vaiue hedge for four
months, and (3) an undesignated hedge for tiie remaining
three months.