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
Chapter11: Managing Transaction Exposure
Section: Chapter Questions
Problem 9QA
Related questions
Question
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
![4
points
eBook
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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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7affad74-e649-4e04-82d7-ba5d5105ef5b%2F476f8019-a5c5-4dcc-a98e-04fc808ba9e1%2F5vpvges_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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
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