1.On September 1, 2020, Bain Corp. received an order for equipment from a foreigncustomer for 300,000 local currency units (LCU) when the peso equivalent was P96,000. Bainshipped the equipment on October 15, 2020, and billed the customer for 300,000 LCU when thepeso equivalent was P100,000. Brain received the customer's remittance in full onNovember16, 2020, and sold the 300,000 LCU for P105,000. In its income statement for theyear ended December 31, 2020, Brain should report a foreign exchange transaction gain of?

Foreign Currency: It is the conversion of one country's currency into another. In a free economy, a…

On September 1, 2020, Bain Corp. received an order for equipment from a foreign customer for 300,000 local currency units (LCU) when the peso equivalent was P96,000. Bain shipped the equipment on October 15, 2020, and billed the customer for 300,000 LCU when the 1. peso equivalent was P100,000. Brain received the customer's remittance in full on November16, 2020, and sold the 300,000 LCU for P105,000. In its income statement for the year ended December 31, 2020, Brain should report a foreign exchange transaction gain of?

On September 1, 2020, Bain Corp. received an order for equipment from a foreign customer for 300,000 local currency units (LCU) when the peso equivalent was P96,000. Bain shipped the equipment on October 15, 2020, and billed the customer for 300,000 LCU when the 1. peso equivalent was P100,000. Brain received the customer's remittance in full on November16, 2020, and sold the 300,000 LCU for P105,000. In its income statement for the year ended December 31, 2020, Brain should report a foreign exchange transaction gain of?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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1.
On September 1, 2020, Bain Corp. received an order for equipment from a foreign
customer for 300,000 local currency units (LCU) when the peso equivalent was P96,000. Bain
shipped the equipment on October 15, 2020, and billed the customer for 300,000 LCU when the
peso equivalent was P100,000. Brain received the customer's remittance in full on
November16, 2020, and sold the 300,000 LCU for P105,000. In its income statement for the
year ended December 31, 2020, Brain should report a foreign exchange transaction gain of?

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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.
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Brandlin company of anaheim, california, sells parts to a foreign customer on december 1, 2017, with payment of 24,000 korunas to be received on march 1, 2018. Brandlin enters into a forward contact on december 1, 2017 to sell 24,000 korunas on march 1, 2018. Relevant exchange rates for the korunas on various dates are as follow: date spot rate forward rate december 1, 2017 4.20 4.275 december 31, 2017 4.30 4.400 march 1, 2018 4.45 n/a brandli's incremental borrowing rate is 12 percent. The present value factor for two months at annual interest rate of 12 percent (1 percent per month) is 0.9803. Brandlin must close its books and prepare financial statements at december 31. 1. Assuming that brandlin designates the forward contract as a cash flow hedge of a foreign currency receivable and recognizes any premium or discount…
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