For the year ended December 31, 20X1, the amount of other comprehensive income reported on the statement of comprehensive income should be: O $6,000 negative O $3,000 positive O $750 positive $5.250 negative
For the year ended December 31, 20X1, the amount of other comprehensive income reported on the statement of comprehensive income should be: O $6,000 negative O $3,000 positive O $750 positive $5.250 negative
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
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Question
![Bento entered into a forward exchange contract on October 1, 20X1, to be settled on March 1, 20X2, to hedge a forecasted purchase of inventory on November 1, 20X1. The
inventory was purchased on November 1 with payment due on March 1, 20X2. The forward contract was for £75,000, the expected cost of the inventory. The derivative is designated
as a cash flow hedge to be continued through to payment of the pound-denominated account payable. The relevant direct exchange rates for the pound follow:
Date
October 1, 20X1.
November 1, 20X1
December 31, 20X1
Spot Rate
O $6,000 negative
O $3,000 positive
O $750 positive
O $5,250 negative
$1.61
$1.65
$1.58
Forward Rate
(to March 1, 20X2)
$1.63
$1.68
$1.60
For the year ended December 31, 20X1, the amount of other comprehensive income reported on the statement of comprehensive income should be:
[1]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe5c21199-ca38-4dd8-a846-b64d60967807%2F27e486dd-5a87-4ed0-92b4-9557514864d8%2F80ok78_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Bento entered into a forward exchange contract on October 1, 20X1, to be settled on March 1, 20X2, to hedge a forecasted purchase of inventory on November 1, 20X1. The
inventory was purchased on November 1 with payment due on March 1, 20X2. The forward contract was for £75,000, the expected cost of the inventory. The derivative is designated
as a cash flow hedge to be continued through to payment of the pound-denominated account payable. The relevant direct exchange rates for the pound follow:
Date
October 1, 20X1.
November 1, 20X1
December 31, 20X1
Spot Rate
O $6,000 negative
O $3,000 positive
O $750 positive
O $5,250 negative
$1.61
$1.65
$1.58
Forward Rate
(to March 1, 20X2)
$1.63
$1.68
$1.60
For the year ended December 31, 20X1, the amount of other comprehensive income reported on the statement of comprehensive income should be:
[1]
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