On October 20, 2020, Corporation H entered a contract to receive two million Argentinian pesos on January 20, 2021, for $100,000 based on a $1 per exchange rate futures contract (three months). 20 Argentinian pesos. This contract is a derivative because its value depends on the future value of the Argentinian peso against the dollar. On December 21 of that year, how should this contract (forward) be presented in the financial statements? Must be shown only as an asset at market value Must be shown as assets and liabilities at market value Should only be disclosed in the notes to the financial statements Should be shown only as a liability at market value.
On October 20, 2020, Corporation H entered a contract to receive two million Argentinian pesos on January 20, 2021, for $100,000 based on a $1 per exchange rate futures contract (three months). 20 Argentinian pesos. This contract is a derivative because its value depends on the future value of the Argentinian peso against the dollar. On December 21 of that year, how should this contract (forward) be presented in the financial statements? Must be shown only as an asset at market value Must be shown as assets and liabilities at market value Should only be disclosed in the notes to the financial statements Should be shown only as a liability at market value.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On October 20, 2020, Corporation H entered a contract to receive two million Argentinian pesos on January 20, 2021, for $100,000 based on a $1 per exchange rate futures contract (three months). 20 Argentinian pesos. This contract is a derivative because its value depends on the future value of the Argentinian peso against the dollar. On December 21 of that year, how should this contract (forward) be presented in the financial statements?
- Must be shown only as an asset at market value
- Must be shown as assets and liabilities at market value
- Should only be disclosed in the notes to the financial statements
- Should be shown only as a liability at market value.
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