Exercise 3 (LO 5, 6) Measuring changes in the value of derivatives and account-ing for such changes. A company has acquired two derivatives: an option to buy foreigncurrency (FC) and a forward contract to buy FC. Both derivatives were acquired on the sameday, for the same notional amount and expire on May 31. Relevant information involving thederivatives is as follows:February 1April 30May 31Notional amount in FC ...100,000$$$$ 1,000100,000$ 2.082$100,000$$ 2.10$ 2.05$ 5,000Spot rate ...Forward rate2.052.102.0924$ 3,4002.07Strike price.Value of option2.052.051. Calculate the intrinsic and the time value of the option for each of the above dates and indi-cate how the changes in each of these values would be accounted for if the option hedged:(a) a forecasted FC transaction and (b) a recognized FC-denominated liability.

Other Comprehensive Income (OCI) refers to the income earned by an entity or an individual through…

Answered: or such changes. A company has acquired…

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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Illu.1 : A Ltd. acquired B Ltd. Business with the following values. Rs. Fixed Asets 3,00,000 1,00,000 50,000 Current assets Debentures Current Liabilities 1,00,000 Calculate purchase consideration. CS Scanned with CamScanner
A business combination involves a contingent consideration. It is considered 80% probable that a payment of $700,000 will become payable three years after the acquisition date. Using a 5% discount rate, what liability should be recorded for the contingent consideration on the acquisition date? Select one: a. $604,686 b. $700,000 c. $483,749 d. $560,000
Question 11. C Ltd has a fiscal year end of Sep. 30th. On Oct. 1, 20X8 C Ltd leases an asset to a lessee for a term of five years. The lessee is required to make five lease payments of £27,500, starting with Oct 1, 20X8. The fair value of the asset on Oct 1, 20X8 is £113,500. C Ltd incurs initial direct costs of £421 and the rate of interest implicit in the lease is 12%. At the end of the lease term, ownership of the asset will remain with C Ltd, the asset is expected to have come to the end of its economic life and to have a residual scrap value of £5,100. i) Provide two reasons for why this lease is a finance lease and not an operating lease. ii) Calculate the net investment in the lease at commencement. iii) Prepare lessor's journal entries for the year ending Sep. 30th, 20X9.
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(AICPA) 6. On January 1, 20x8, Harrow Co. as lessee signed a five-year noncancellable equipment lease with annual payments of P100,000 beginning December 31, 20x8. The implicit interest rate is 10%. How much is the interest expense for the year ended December 31, 20x8? a. 37,900 (AICPA) b. 27,900 с. 24,200 d. 0
Indicate the tramsaction prie for this situation and when revenue will be recognized Groupo sels goods to Magnus for $500,000 payment due in two installments first installment payable in 18 months and the second paymend due 6 months later. The present value of the future payments is $464,000 O $500.000 recognized at the point of sale O $464.000 reciognized at the point of sale and recognized interest revenue over the payment period O $500.000 recognize $250,000 in 18 months and $250,000 recognized 6 months later $500.000 recognize $464 000 revenue and $36.000 of interest revenue
L2-4 Awe Company pays CU500,000,000 for a 30% interest in Groy Company on July 1, 19x2 when the book value of Groy Company's net assets equals fair value. Awe Company amortizes any goodwill from this investment over 20 years. Information related to Groy Company is as follows: 31 Desember 19x1 31 Desember 19x2 Share capital, nominal IDR 1,000 Rp600.000.000 Rp600.000.000 Retained earning 400.000.000 500.000.000 Total Shareholders' Equity 1.000.000.000 1.100.000.000 Net profit earned during the year 19x2 200.000.000 Dividend for the year 19x2 (paid on March 1 of Rp. 50,000,000 and September 1 of Rp. 50,000,000) 100.000.000 Required: calculate Awe Company's revenue from Groy Company for the year 19x2
of-use asset for P986,986 plus P93,301 loss d. Sunset Co. should ignore the modification Reconstruction of information 15. The noncurrent liabilities section of Calm Co.'s statement of financial position as of December 31, 20x1 reported a lease liability of P1,066,986, net of current portion. Lease payments of P200,000 are due every January 1st of the year. incremental borrowing rate is 11% and the lessor's implicit rate, which is known to Calm Co., is 10%. What amount of lease liability, net of current portion, should Calm Co. report Calm Co.'s on December 31, 20x2? a. 871,052 b. 973,685 c. 986,986 d. 1,066,986
Problem 8-5 (with solution/explanation)
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A18-11 Lessee Accounting; Amortization Table; Entries: (LO 18-2, 18-4) Watson Co. entered into a lease arrangement for a truck on 1 April 20X2 that had the following terms. • The lease payments are $13,400 per year, payable each 1 April for four years. The lease may be renewed at the option of the lessor for a further five years for $4,000 per year. • Based on an allocation of the lease payment on relative stand-alone prices, the lease and non-lease components (maintenance) are $12,100 and $1,300 respectively. Expected amounts to be paid under the residual value guarantee are $11,400 if the lessee ends the lease at the end of the first lease term, and $3,800 if they end the lease at the end of the second lease term. • The leased asset has a useful life of ten years and a fair value of $64,000. The Interest rate implicit in the lease is 8%. . (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: 1-a. Calculate the right-of-use asset.…

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or such changes. A company has acquired two derivatives: an op cy (FC) and a forward contract to buy FC. Both derivatives were a or the same notional amount and expire on May 31. Relevant inforn tives is as follows: February 1 April 30 al amount in FC ... ute 100,000 $ 2.05 100,000 $ $ 2.08