None On December 1, 2014, SMC entered into a transaction toimport raw materials from a foreign country. The accountis to be settled March 1 with the payment of 50,000 euros.The spot rate for euros on December 1 was $1.4/euro andon March 1 was $1.44/euro. If SMC does not hedge thepayable, raw materials will be recorded on the books onMarch 1, 2015 at what amount?a. $70,000b. none of thesec. $72,000d. 50,000 euros

Step 1: Understanding the TransactionSMC entered into a transaction to import raw materials from a…

Answered: On December 1, 2014, SMC entered into a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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On Mei 31, 2016, PT Risa sold the item to PT Bulan (functional currency is US $) for of the total $ 30,000 invoice by November 31, 2018. The functional currency of PT Risa is IDR , and the effective date is December 31st. Exchange rate between $ and IDR: Mei 31, 2016 ($1) : Spot rate = IDR 15,575 US$1 , Forward rate (6 months) = IDR 15,375 November 31, 2016 ($1) : Spot rate = IDR 14,250 PT Risa completed the forex risk hedging transaction on November 31, 2016 by signing a forward contract to sell US $ for $ 30,000. PT Risa also chose to apply fair value hedging accounting in accordance with PSAK71. prepare journal entries recorded by PT Risa on Mei 31, 2016 and November 31, 2016. Please explain !
On October 15, 2020, Buy Co., a Canadian company, entered into a contract to purchase goods from Sell Ltd., a foreign corporation. The contract terms called for the goods to be delivered to Buy Co.'s Calgary location on June 30, 2021. The cost of goods is USD $600,000 to be settled on July 31, 2021. On October 15, 2020, Buy Co. also arranged for a forward contract through its bank for USD $600,000. The goods were delivered on time, and Buy Co. settled with Sell Ltd. on July 31, 2021. Buy Co. has a May 31 year-end. The spot and forward rates are as follows: Spot Rate ($CAD): 1 USD = x.xx CAD Forward Rate ($CAD): 1 USD = x.xx CAD October 15, $1.42 $1.46 2020 May 31, 2021 $1.44 $1.48 June 30, $1.45 $1.49 2021 July 31, 2021 $1.50 $1.50 Required Prepare Buy Co.'s journal entries to reflect the above assuming that: a. the hedge is a cash flow hedge, and b. the hedge is a fair value hedge.

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