Arbie Corporation, a Philippine importer, purchased merchandise from T Company of Thailand for 300,000 baht on March 1, 2016, when the spot rate for a baht was P1.63. The accounts payable denominated in baht was not due until May 30, 2016, so Arbie Company immediately entered into a 90-day forward contract to hedge the transaction against exchange rate changes. The contract was made at a forward exchange rate of P1.65 per baht. Arbie settled the forward contract and the accounts payable on May 30, 2016 when the spot rate for a baht is P1.60. On the settlement of the forward contract on May 30, 2016, Arbie should record a forex gain loss of:
Arbie Corporation, a Philippine importer, purchased merchandise from T Company of Thailand for 300,000 baht on March 1, 2016, when the spot rate for a baht was P1.63. The accounts payable denominated in baht was not due until May 30, 2016, so Arbie Company immediately entered into a 90-day forward contract to hedge the transaction against exchange rate changes. The contract was made at a forward exchange rate of P1.65 per baht. Arbie settled the forward contract and the accounts payable on May 30, 2016 when the spot rate for a baht is P1.60. On the settlement of the forward contract on May 30, 2016, Arbie should record a forex gain loss of:
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Arbie Corporation, a Philippine importer, purchased merchandise from T Company of Thailand for 300,000 baht on March 1, 2016, when the spot rate for a baht was P1.63. The accounts payable denominated in baht was not due until May 30, 2016, so Arbie Company immediately entered into a 90-day forward contract to hedge the transaction against exchange rate changes. The contract was made at a forward exchange rate of P1.65 per baht. Arbie settled the forward contract and the accounts payable on May 30, 2016 when the spot rate for a baht is P1.60.
On the settlement of the forward contract on May 30, 2016, Arbie should record a forex gain loss of:
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education