Monument Company (a U.S.-based company) ordered a machine costing €150,000 from a foreign supplier on January 15, w
Q: zar Plc, which imports optical equipment from Germany for sale to UK providers of ophthalmic…
A: (i). Forward Purchase Buy 375,000 Euro three months forward. The cost in pounds at the forward…
Q: Based on past experience, Maas Corp. (a U.S.-based company) expects to purchase raw materials from a…
A: Following is the journal entry with correct amount
Q: please explain as detailed as possible
A: Requirement B & CImpact on net income on second quarter: Loss on Firm Commitment$-7800Gain on…
Q: On June 1, Parker-Mae Corporation (a U.S.-based company) received an order to sell goods to a…
A: Solution: Req A: Journal EntriesDateAccountsDebitCredit01-JunForeign Currency…
Q: Melton Company sold equipment to a Canadian company for 100,000 Canadian dollars (C$) on January 1,…
A: The rate at which one country’s currency can be converted into another country’s currency referred…
Q: Required: prepare the journal entry based on the given information
A: It has been given in the question that Contract price of the special order goods is 2,000,000 yen…
Q: What amount of foreign currency transaction gain or loss would Davis report on its income statement…
A: To determine the foreign currency transaction gain or loss for Davis in year 20X5, you need to…
Q: Myway Company sold equipment to a Canadian company for 100,000 Canadian dollars (C$) on January 1,…
A: Foreign Exchange Rate simply means exchange rate for foreign currency. It is the value of one…
Q: On November 1, 20X6, Smith Imports Incorporated contracted to purchase teacups from England for…
A: Journal entries
Q: On June 1, Maxwell Corporation (a U.S.-based company) sold goods to a foreign customer at a price of…
A: Net income means how much money Maxwell Corporation made or lost from June 1 to June 30. It is…
Q: On January 1, GEN enters into a contract with LORD for the sale of a high-end security scanner for…
A: Options are normally included in the trade of stock and other financial instruments. However,…
Q: Maplewood Inc. sells lumber to a number of clients around the world. On December 1, 2020 the company…
A: Balance sheet:Balance sheet stands for the statement and information that shows the assets and…
Q: Shandra Corporation (a U.S.-based company) expects to order goods from a foreign supplier at a price…
A: Net Income -Net income is the entire amount of money earned by a person or corporation over a…
Q: On March 1, 2012, Westfield Corporation received an order for parts from a foreign customer at a…
A: Fair value of forward contract = ( 0.120 - 0.118 ) x 500,000…
Q: Based on past experience, Maas Corp. (a U.S.-based company) expects to purchase raw materials from a…
A: A journal entry is a form of accounting entry that is used to report a business transaction in a…
Q: On June 1, 2017, Micro Corp. received an order for parts from a Mexican customer at a price of…
A: Workings: Fair value of forward contract = ( 0.120 - 0.118 ) x 1000000…
Q: E6-10 Smart Watch Company reported the following income statement data for a 2-year period. Sales…
A: Income Statement: One of a company's financial accounts, an income statement, commonly referred to…
Q: During December of the current year, Exide company based in America, entered into the following…
A:
Q: Shandra Corporation (a U.S. -based company) expects to order goods from a foreign supplier at a…
A: Cashflow hedge accounting utilizes financial instruments to mitigate risks linked to forthcoming…
Q: Pacifico Company, a U.S.-based importer of beer and wine, purchased 1,100 cases of Oktoberfest-style…
A: Answer journal entries to account for this import purchase.
Q: Williams Corp. is considering signing contracts that will obligate the firm to purchase 100000 Swiss…
A: Exchange rate is the conversion rate at which one currency is converted into another currency at…
Q: The company ordered the wine on September 15. It arrived on October 31, and the company made payment…
A: Call option premium on September 15 is $0.03. Vino Veritas purchased a 45-day call option for 600000…
Q: On December 1, 2020, Beta Company, a U.S. electronics company purchased equipment from a Brazilan…
A: Forward Exchange Contract: It is a contract under which a business consents to purchase a specific…
Q: On December 1, 20X8, Denizen Corporation entered into a 120-day forward contract to purchase 200,000…
A: Forward contract Forward contract is defined as an agreement initiated between two parties for…
Q: Transaction exposure. International Products has contracted for 7,000 winter hats from Russia, The…
A: The question is based on the concept of exchange rate and the value of the exchange rate changes…
Q: Pacifico Company, a U.S.-based importer of beer and wine, purchased 1,000 cases of Oktoberfest-style…
A: A journal entry is a form of accounting entry that is used to report a business transaction in a…
Q: On June 1, gons-care ltd (a U.S.-based company) received an order to sell goods to a foreign…
A: Journal Entries 1. Record the purchase of the foreign currency option on June 1 Debit: Foreign…
Q: On June 1, Maxwell Corporation (a U.S.-based company) sold goods to a foreign customer at a price of…
A: Maxwell Corporation Foreign Currency Hedge AccountingScenario: Maxwell Corporation sells goods to a…
Q: . Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase…
A: The record of day-to-day transactions in the books of accounts is called journal entries. In a…
Q: 19,000 dinars to be made on March 1, 2021 The materials are consumed immediately and recognized as…
A: DICLAIMER:SINCE YOU HAVE POSTED MULTIPLE SUB PART QUESTION, WE WILL SOLVE 3 PARTS .TO GET OTHERS…
Q: Manufacturer M, a large equipment manufacturer, enters into a contract to sell Product A to Customer…
A: When there is a significant time period between when the entity transfers the goods or service to…
Q: Fergusson Corporation, a U.S. company, manufactures components for the automobile industry. In the…
A:
Q: Blowfast Corporation, a U.S. exporter, sold wind turbines to a Mexican customer at a price of…
A: Foreign Exchange loss/gain: Foreign Exchange loss /gain is the result due to currency…
Q: Dune Ltd. is an Irish company which will pay CAN$609,000 to a supplier in Toronto in three months…
A: Spot Rate is that rate of exchange in which we can convert the one country currency to another…
Q: Pacifico Company, a U.S.-based importer of beer and wine, purchased 1,100 cases of Oktoberfest-style…
A: Foreign Currency Option: An option on foreign exchange is a type of derivative financial product…
Q: On November 1, 2020, Ocean Grove, Inc., a U.S. company, purchased from Monterrey Corporation, a…
A: Forward contract can be defined as a contract in which the buyer of the contract agrees with the…
Q: (Credit Creation) Understanding bank balance sheet is useful since it also help our understanding of…
A: Bank - A bank is a type of financial entity that lends money while both taking deposits from the…
Q: Pacifico Company, a U.S.-based importer of beer and wine, purchased 1,500 cases of Oktoberfest-style…
A: Given: It is purchased 1,500 cases of Oktoberfest-style beer from a German supplier for 390,000…
Q: A UK importer contracts to pay 18 million Yen for raw material from a supplier in Japan on one…
A: We have to find the total cost of the import in domestic currency. Spot rate and forward rate quotes…
Q: On 1 July 2019 Celine Consultants Ltd completes a contract to provide advice on the installation of…
A: Journal entries are defined as recording of business transactions into the books of accounts of the…
Monument Company (a U.S.-based company) ordered a machine costing €150,000 from a foreign supplier on January 15, when the spot rate was $1.19 per €. A one-month forward contract was signed on that date to purchase €150,000 at a forward rate of $1.21. The forward contract is properly designated as a fair value hedge of the €150,000 firm commitment. On February 15, when the company receives the machine, the spot rate is $1.20. At what amount should Monument Company capitalize the machine on its books?
-
$29,000
-
$181,500
-
$178,500
-
$180,000
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- 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 $0.28 per Norwegian krone, Derby enters into a forward contract to purchase 617,500 Norwegian kroner at a three-month forward rate of $0.29. 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 $0.286 per Norwegian krone, Derby orders and receives the merchandise, paying 617,500 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…On June 1, 2017, Micro Corp. received an order for parts from a Mexican customer at a price of 1,000,000 Mexican pesos with a delivery date of July 31, 2017. On June 1, when the U.S. dollar–Mexican peso spot rate is $0.115, Micro Corp. entered into a two month forward contract to sell 1,000,000 pesos at a forward rate of $0.12 per peso. Micro designates the forward contract as a fair value hedge of the firm commitment to receive pesos, and the fair value of the firm commitment is measured by referring to changes in the peso forward rate. Micro delivers the parts and receives payment on July 31, 2017, when the peso spot rate is $0.118. On June 30, 2017, the Mexican peso spot rate is $0.123, and the forward contract has a fair value of $2,400.What is Micro’s net increase or decrease in cash flow from having entered into this forward contract hedge? Choose the correct.a. $–0–.b. $1,000 increase in cash flow.c. $1,500 decrease in cash flow.d. $2,000 increase in cash flow.explain in details
- Vino Veritas Company, a U.S.-based importer of wines and spirits, placed an order with a French supplier for 2,000 cases of wine at a price of 300 euros per case. The total purchase price is 600,000 euros. Relevant exchange rates for the euro are as follows: Date Spot Rate Forward Rateto October 31 Call Option Premiumfor October 31(strike price $1.50) September 15 $ 1.50 $ 1.56 $ 0.035 September 30 1.55 1.59 0.070 October 31 1.60 1.60 0.100 Vino Veritas Company has an incremental borrowing rate of 12 percent (1 percent per month) and closes the books and prepares financial statements at September 30. The wine arrived on September 15, and the company made payment on October 31. On September 15, Vino Veritas purchased a 45-day call option for 600,000 euros. It properly designated the option as a cash flow hedge of a foreign currency payable. Prepare journal entries…On June 1, Maxwell Corporation (a U.S.-based company) sold goods to a foreign customer at a price of 1,110,000 pesos and will receive payment in three months on September 1. On June 1, Maxwell acquired an option to sell 1,110,000 pesos in three months at a strike price of $0.076. The time value of the option is excluded from the assessment of hedge effectiveness, and the change in time value is recognized in net income over the life of the option. Relevant exchange rates and option premia for the peso are as follows: Date June 1 June 30 September 1 Maxwell must close its books and prepare its second-quarter financial statements on June 30. a-1. Assuming that Maxwell designates the foreign currency option as a cash flow hedge of a foreign currency receivable, prepare journal entries for the export sale and related hedge in U.S. dollars. a-2. What is the impact on net income over the two accounting periods? b-1. Assuming that Maxwell designates the foreign currency option as a fair value…Shandra Corporation (a U.S.-based company) expects to order goods from a foreign supplier at a price of 107,000 pounds, with delivery and payment to be made on June 15. On April 15, when the spot rate is $1.27 per pound, Shandra purchases a two-month call option on 107,000 pounds and designates this option as a cash flow hedge of a forecasted foreign currency transaction. The time value of the option is excluded in assessing hedge effectiveness; the change in time value is recognized in net income over the life of the option. The option has a strike price of $1.27 per pound and costs $1,070. The goods are received and paid for on June 15. Shandra sells the imported goods in the local market immediately. The spot rate for pounds is $1.320 on June 15, Required: a-1. Prepare all journal entries for Shandra Corporation related to this transaction and hedge. a-2. What amount should Shandra Corporation report in net income as cost of goods sold for the quarter ending June 30? b. What amount…
- On October 1, 2024, Wildhorse Corporation ordered some equipment from a supplier for 322,000 euros. Delivery and payment are to occur on November 15, 2024. The spot rates on October 1 and November 15, 2024, are $1.20 and $1.30, respectively. (a) - Your answer is partially correct. Assume that Wildhorse entered into a forward contract on October 1, 2024, to hedge the firm commitment. The forward rates for euros for November 15 delivery were October 1 November 15 $1.23 $1.30 Furthermore, assume the equipment was purchased and paid for on November 15. Prepare all journal entries needed to record and settle the hedge and to record the purchase of the equipment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)Icebreaker Company (a U.S.-based company) sells parts to a foreign customer on December 1, 2020, with payment of 16,000 dinars to be received on March 1, 2021. Icebreaker enters into a forward contract on December 1, 2020, to sell 16,000 dinars on March 1, 2021. The forward points on the forward contract are excluded in assessing hedge effectiveness and are amortized to net income using a straight-line method on a monthly basis. Relevant exchange rates for the dinar on various dates are as follows: Date Spot Rate Forward Rate(to March 1, 2021) December 1, 2020 $ 3.40 $ 3.475 December 31, 2020 3.50 3.600 March 1, 2021 3.65 N/A Icebreaker must close its books and prepare financial statements at December 31. a-1. Assuming that Icebreaker designates the forward contract as a cash flow hedge of a foreign currency receivable, prepare journal entries for the sale and foreign currency forward contract in U.S. dollars. a-2. What is the impact on…Torres Corporation (a U.S.-based company) expects to order goods from a foreign supplier at a price of 106,000 pounds, with delivery and payment to be made on September 20. On July 20, Torres purchased a two-month call option on 106,000 pounds and designated this option as a cash flow hedge of a forecasted foreign currency transaction. The option has a strike price of $1.35 per pound and costs $1,060. The spot rate for pounds is $1.35 on June 20 and $1.40 on September 20. What amount will Torres Corporation report as an option expense in net income for the quarter ended September 30? Multiple Choice $530. $5,300. $2,300. $1,060.
- Pacifico Company, a U.S.-based importer of beer and wine, purchased 1,100 cases of Oktoberfest-style beer from a German supplier for 242,000 euros. Relevant U.S. dollar exchange rates for the euro are as follows: Date Spot Rate Forward Rateto October 15 Call Option Premiumfor October 15(strike price $1.10) August 15 $ 1.10 $ 1.16 $ 0.05 September 30 1.15 1.19 0.06 October 15 1.18 1.18 (spot) N/A The company closes its books and prepares third-quarter financial statements on September 30. Assume that the beer arrived on August 15, and the company made payment on October 15. There was no attempt to hedge the exposure to foreign exchange risk. Prepare journal entries to account for this import purchase. Assume that the beer arrived on August 15, and the company made payment on October 15. On August 15, the company entered into a two-month forward contract to purchase 242,000 euros. The company designated the forward contract as a cash…On October 1, 2020, Mertag Company (a U.S.-based company) receives an order from a customer in Poland to deliver goods on January 31, 2021, for a price of 1,004,000 Polish zlotys (PLN). Mertag enters into a forward contract on October 1, 2020, to sell PLN 1,004,000 in four months (on January 31, 2021). U.S. dollar–Polish zloty exchange rates are as follows: Date Spot Rate Forward Rate(to January 31, 2021) October 1, 2020 $ 0.27 $ 0.31 December 31, 2020 0.30 0.34 January 31, 2021 0.32 N/A Mertag designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate, and, therefore, forward points are included in assessing hedge effectiveness. Mertag must close its books and prepare financial statements on December 31. Discounting to present value can be ignored. Prepare journal entries for the foreign currency forward contract,…Please help me with explanation
