1- Jackson Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2021, with payment of 20million Korean won to be received on January 15, 2022. The following exchange rates applied:DateSpot RateForward Rate to Jan.15December 16, 2021$0.00082 $0.00089 December 31, 2021 0.00080 0.00083January 15, 2022 0.00086 0.00086Assuming a forward contract was not entered into, what would be the net impact on Jackson Corp's 2021 incomestatement related to this transaction?Multiple Choice. $600 (gain).⚫ $600 (loss).⚫ $400 (gain).⚫ $400 (loss).. So2- Jackson Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2021, with payment of 20million Korean won to be received on January 15, 2022. The following exchange rates applied:DateSpot RateForward Rate to Jan.15December 16, 2021$0.00082 $0.00089 December 31, 2021 0.00080 0.00083January 15, 2022 0.00086 0.00086Assuming a forward contract was entered into on December 16 as a fair value hedge, what would be the net foreignexchange gain or loss on Jackson's 2021 income statement related to this transaction? Jackson amortizes forward pointsusing the straight-line method. Ignore present values.Multiple Choice• SO (no impact).⚫ $200 (loss).⚫ $600 (gain).. $800 (loss).⚫ $700 (gain).3- On April 1, Quality Corporation, a U.S. company, expects to sell merchandise to a French customer in three months,denominating the transaction in euros. On April 1, the spot rate is $1.41 per euro, and Quality enters into a three-monthforward contract cash flow hedge to sell 400,000 euros at a rate of $1.36. At the end of three months, the spot rate is$1.37 per euro, and Quality delivers the merchandise, collecting 400,000 euros. What amount will Quality recognize inSales from these transactions?Multiple Choice. $o.. $400,000.•$544,000.$548,000.⚫ $564,000.

On December 16, 2021, the spot rate is $0.00082, so 20 million Korean won is equivalent…

1- Jackson Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2021, with payment of 20 million Korean won to be received on January 15, 2022. The following exchange rates applied: DateSpot RateForward Rate to Jan.15December 16, 2021$0.00082 $0.00089 December 31, 2021 0.00080 0.00083 January 15, 2022 0.00086 0.00086 Assuming a forward contract was not entered into, what would be the net impact on Jackson Corp's 2021 income statement related to this transaction? Multiple Choice ⚫ $600 (gain). ⚫ $600 (loss). . $400 (gain). ⚫ $400 (loss). .S0

1- Jackson Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2021, with payment of 20 million Korean won to be received on January 15, 2022. The following exchange rates applied: DateSpot RateForward Rate to Jan.15December 16, 2021$0.00082 $0.00089 December 31, 2021 0.00080 0.00083 January 15, 2022 0.00086 0.00086 Assuming a forward contract was not entered into, what would be the net impact on Jackson Corp's 2021 income statement related to this transaction? Multiple Choice ⚫ $600 (gain). ⚫ $600 (loss). . $400 (gain). ⚫ $400 (loss). .S0

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1- Jackson Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2021, with payment of 20
million Korean won to be received on January 15, 2022. The following exchange rates applied:
DateSpot RateForward Rate to Jan.15December 16, 2021$0.00082 $0.00089 December 31, 2021 0.00080 0.00083
January 15, 2022 0.00086 0.00086
Assuming a forward contract was not entered into, what would be the net impact on Jackson Corp's 2021 income
statement related to this transaction?
Multiple Choice
. $600 (gain).
⚫ $600 (loss).
⚫ $400 (gain).
⚫ $400 (loss).
. So
2- Jackson Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2021, with payment of 20
million Korean won to be received on January 15, 2022. The following exchange rates applied:
DateSpot RateForward Rate to Jan.15December 16, 2021$0.00082 $0.00089 December 31, 2021 0.00080 0.00083
January 15, 2022 0.00086 0.00086
Assuming a forward contract was entered into on December 16 as a fair value hedge, what would be the net foreign
exchange gain or loss on Jackson's 2021 income statement related to this transaction? Jackson amortizes forward points
using the straight-line method. Ignore present values.
Multiple Choice
• SO (no impact).
⚫ $200 (loss).
⚫ $600 (gain).
. $800 (loss).
⚫ $700 (gain).
3- On April 1, Quality Corporation, a U.S. company, expects to sell merchandise to a French customer in three months,
denominating the transaction in euros. On April 1, the spot rate is $1.41 per euro, and Quality enters into a three-month
forward contract cash flow hedge to sell 400,000 euros at a rate of $1.36. At the end of three months, the spot rate is
$1.37 per euro, and Quality delivers the merchandise, collecting 400,000 euros. What amount will Quality recognize in
Sales from these transactions?
Multiple Choice
. $o.
. $400,000.
•
$544,000.
$548,000.
⚫ $564,000.

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