4 points eBook Print References On March 1, Derby Corporation (a U.S.-based company) expects to order merchandise from a supplier in Norway in three months. On March 1, when the spot rate is $0.40 per Norwegian krone, Derby enters into a forward contract to purchase 590,000 Norwegian kroner at a three-month forward rate of $0.45. Forward points are excluded in assessing the forward contract's effectiveness as a hedge, and are amortized to net income on a straight-line basis. At the end of three months, when the spot rate is $0.441 per Norwegian krone, Derby orders and receives the merchandise, paying 590,000 kroner. The merchandise is sold within 30 days. Required: a-1. Prepare all journal entries for Derby Corporation related to this transaction and hedge. a-2. What amount should Derby Corporation report in the current year's net income as cost of goods sold? b. What amount should Derby Corporation report in the current year's net income as foreign exchange gain or loss? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B What amount should Derby Corporation report in the current year's net income as cost of goods sold? Cost of goods sold $ 260,190 < Req A1 Req B > Check

4 points eBook Print References On March 1, Derby Corporation (a U.S.-based company) expects to order merchandise from a supplier in Norway in three months. On March 1, when the spot rate is $0.40 per Norwegian krone, Derby enters into a forward contract to purchase 590,000 Norwegian kroner at a three-month forward rate of $0.45. Forward points are excluded in assessing the forward contract's effectiveness as a hedge, and are amortized to net income on a straight-line basis. At the end of three months, when the spot rate is $0.441 per Norwegian krone, Derby orders and receives the merchandise, paying 590,000 kroner. The merchandise is sold within 30 days. Required: a-1. Prepare all journal entries for Derby Corporation related to this transaction and hedge. a-2. What amount should Derby Corporation report in the current year's net income as cost of goods sold? b. What amount should Derby Corporation report in the current year's net income as foreign exchange gain or loss? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B What amount should Derby Corporation report in the current year's net income as cost of goods sold? Cost of goods sold $ 260,190 < Req A1 Req B > Check

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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