dont give answer in image format Exercise 12-14 Page: 673Fair Value HedgeConsider the following information:1. On December 1, 2008, a U.S. firm contracts to sell equipment (with an asking price of 1,000,000 pesos) inMexico. The firm will take delivery and will pay for the equipment on March 1, 2009.Illustration-Forward Contract2. On December 1, 2008, the company enters into a forward contract to sell 1,000,000 pesos for $0.0948 onMarch 1, 2009.3. Spot rates and the forward rates for March 1, 2009, settlement were as follows (dollars per peso):Forward Ratefor 3/1/09$0.09480.0944Spot RateDecember 1, 2008$0.09540.0949Balance sheet date (12/31/08)March 1, 20090.09474. On March 1, the equipment was sold for 1,000,000 pesos. The cost of the equipment was $40,000.Required:Prepare all journal entries needed on December 1, December 31, and March 1 to account for the forwardcontract, the firm commitment, and the transaction to sell the equipment.

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Description: dont give answer in image format Exercise 12-14 Page: 673Fair Value HedgeConsider the following information:1. On December 1, 2008, a U.S. firm contracts to sell equipment (with an asking price of 1,000,000 pesos) inMexico. The firm will take deliver

Fair Value Hedges - Forward Contract A sort of hedging known as a "fair value hedge" tries to lessen…

Business

Accounting

Balance sheet date (12/31/08) March 1, 2009 0.0949 0.0947 4. On March 1, the equipment was sold for 1,000,000 pesos. The cost of the equipment was $40,000. Required: Prepare all journal entries needed on December 1, December 31, and March 1 to account for the forward contract, the firm commitment, and the transaction to sell the equipment. 0.0944

Balance sheet date (12/31/08) March 1, 2009 0.0949 0.0947 4. On March 1, the equipment was sold for 1,000,000 pesos. The cost of the equipment was $40,000. Required: Prepare all journal entries needed on December 1, December 31, and March 1 to account for the forward contract, the firm commitment, and the transaction to sell the equipment. 0.0944

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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