AccountingCar Corp. (a U.S.-based company) sold parts to a Japanese customer onDecember 1, 2020, with payment of 10 million Japanese yen to be received onJanuary 31, 2021. The following exchange rates applied:DateSpot rateForward rate to 01/31/210.000900.000930.000920.000980.00095December 1, 2020December 31, 2020January 31, 2021Assuming a forward contract was entered into, what would be the net impacton Car Corp.'s 2020 income statement related to this foreign currencytransaction? Assume an annual interest rate of 12% and a fair value hedge. Thepresent value for one month at 12% is .9901.A. $295.05 (loss).B. $ 300 (gain).C. $ 300 (loss).D. $ 700 (gain).E. $ 700 (loss).0.00095

Answer A: $ 295.05 (Loss) Detailed Explanation has been given for the above answer please follow:…

Answered: A. $295.05 (loss).

Business

Accounting

A. $295.05 (loss).

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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