On June 1, 2009, Benguet Manufacturing Corp. received raw materials from aforeign vendor when the spot rate is P 40.00. Payment of 100,000 foreign currency is due in 90days. On the same date, the company acquired a forward contract to buy 120,000 foreigncurrency in 90 days.   The following forward rates per foreign currency were available: June 1, 90-day rate 40.30 June 30, 60-day rate40.40 July 31, 30-day rate40.10   1.What is the contract gain (loss) on hedge on an exposed position? a.(40,000) b.(30,000)c.(20,000) d.(10,000)   2. What is the exchange gain (loss) on a speculative contract in June 2009

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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On June 1, 2009, Benguet Manufacturing Corp. received raw materials from aforeign vendor when the spot rate is P 40.00. Payment of 100,000 foreign currency is due in 90days. On the same date, the company acquired a forward contract to buy 120,000 foreigncurrency in 90 days.
 
The following forward rates per foreign currency were available:
June 1, 90-day rate 40.30
June 30, 60-day rate40.40
July 31, 30-day rate40.10
 
1.What is the contract gain (loss) on hedge on an exposed position?
a.(40,000) b.(30,000)c.(20,000) d.(10,000)
 
2. What is the exchange gain (loss) on a speculative contract in June 2009
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