On Dec 1, 2015, XYZ (a US firm) entered into a transaction to import raw materials from EU country. The account is to be settled Mar 1, 2016 with the payment of 50,000 euros. The spot rate for euros on Dec 1 was $1.4/euro and on Mar 1 was S1.44/euro. If XYZ does not hedge the payable, raw materials will be recorded on the books on March 1, 2016 at:

On Dec 1, 2015, XYZ (a US firm) entered into a transaction to import raw materials from EU country. The account is to be settled Mar 1, 2016 with the payment of 50,000 euros. The spot rate for euros on Dec 1 was $1.4/euro and on Mar 1 was S1.44/euro. If XYZ does not hedge the payable, raw materials will be recorded on the books on March 1, 2016 at:

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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Question

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On Dec 1, 2015, XYZ (a US firm) entered into a transaction to import raw materials from EU country. The
account is to be settled Mar 1, 2016 with the payment of 50,000 euros. The spot rate for euros on Dec 1 was
$1.4/euro and on Mar 1 was $1.44/euro.
If XYZ does not hedge the pavable, raw materials will be recorded on the books on March 1, 2016 at:
O a.
$72,000
Ob. $70,000
O c. 50,000 euros
d. None ofthe above

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