Question 130/0.5 ptsOn September 1, 2018, Bauer Inc. has 10,000 ounces of silver, with an average cost of $13 per ounce, in inventory. Thespot price for silver is $16 per ounce. Bauer decides to retain the inventory until mid-January 2019, hoping that theprice increases to $17 per ounce. To hedge its position, Bauer sells future contracts to sell 10,000 ounces of silver at $17per ounce on January 20, 2019. The firm applies fair value hedge accounting. The market spot rates and future prices forsilver are as follows:January 20Spot Price2019 FuturePriceSeptember 1,$ 16$ 172018December31, 2018January 20,2019$14.50$15.50$ 16.80$ 16.80What is the carrying value of Bauer's inventory of silver on 12/31/2018?HINT: Record the initial value of the inventory and then any adjustments due to hedge accounting journal entries.$130,000nswer$115,000$105,000$145,000weredNone of the above.

The objective of the question is to calculate the carrying value of Bauer's inventory of silver on…

Answered: Question 13 0/0.5 pts On September 1,…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA3: Time Value Of Money

Section: Chapter Questions

Problem 16E

See similar textbooks

Similar questions

In a Nutshell Problem 21 On December 31,2019, Innovation Company sold a machinery costing P5,200,000 which had a carrying amount of P2,200,000 for P3,000,000. The terms of the sales were P600,000 down payment and P1,200,000 payable on December 31 of the next two years. The sale agreement made no mention of interest. However, 9% would be a fair rate for this type of transaction. The present value of an ordinary annuity of 1 at 9% for two years is 1.76. Required: 1. Prepare journal entries for 2019, 2020 and 2021. 2. Determine the carrying amount of the note receivable on December 31,2019, December 31,2020 and December 31,2021 3. Determine the interest income for 2019,2020 and 2021.
Current Attempt in Progress Sheridan.com sells 6700 units of its product for $490 each. The selling price includes a one-year warranty on parts. It is expected that 3% of the units will be defective and that repair costs will average $60 per unit. In the year of sale, warranty contracts are honored on 140 units for a total cost of $8400. What amount should Sheridan.com accrue on December 31 for estimated warranty costs? $8400 O $72360 O $3660 O $12060
Problem 9: Use the following information for the next five questions: On January 1, 2021, PITIFUL Co. sold transportation equipment with a historical cost of P8,000.000 and accumulated depreciation of P2,800,000. In consideration for the sale, PITIFUL Co. received cash of P400,000 and a noninterest-bearing note receivable of P4,000,000 due in 4 equal annual installments starting December 31, 2021. The prevailing rate of interest of this type of note is 12%. 24. How much is the carrying amount of the note on initial recognition? 25. How much is the interest income for 2021? 26. How much is the carrying amount of the note on December 31, 2021? 27. How much is the current portion of the note on December 31, 2021? 28. How much is the noncurrent portion of the note on December 31, 2021? I
13. Central Products sells a certain press for $20,000. Included in this price is an implied service contract of $800. Fifty machines were sold in 2020. Warranty expense incurred during 2020 amounted to $25,000. The company uses the sales warranty accrual method. Which entry would probably not be made in 2020? 25,000 Unearned Warranty Revenue Warranty Revenue а. 25,000 b. Cash 1,000,000 960,000 40,000 Sales Unearned Warranty Revenue Cash 40,000 с. Warranty Revenue 40,000 d. Warranty Expense 25,000 Cash 25,000
Problem 15 On December 31, 2017, Entity Z acquired Lumangyao Corporation’s P1,000,000 notes for P927,880. The market interest rate at that time was 12%. The stated interest rate was 10%, payable annually. The notes mature in five years and classified as financial asset at amortized cost. At December 31, 2019, the note is considered credit impaired. Entity Z determined that it was probable that the issuer would pay back only P600,000 of the principal at maturity. At December 31, 2020, because of the improvement in the credit rating of Lumangyao, Entity Z reassessed the collectibility of the note and now expects to collect P900,000 from Lumangyao at maturity date. The required loss allowance at Dec. 31, 2019 is The impairment gain to be recognized in 2020 is
Problem 15 On December 31, 2017, Entity Z acquired Lumangyao Corporation's P1,000,000 notes for P927,880. The market interest rate at that time was 12%. The stated interest rate was 10%, payable annually. The notes mature in five years and classified as financial asset at amortized cost. At December 31, 2019, the note is considered credit impaired. Entity Z determined that it was probable that the issuer would pay back only P600,000 of the principal at maturity. At December 31, 2020, because of the improvement in the credit rating of Lumangyao, Entity Z reassessed the collectibility of the note and now expects to collect P900,000 from Lumangyao at maturity date. 18. The required loss allowance at Dec. 31, 2019 is
Sh15
16. On January 1, 2020, MELON Incorporated sold its aggregate equipment. The buyer issued a promissory note with a face amount of P10,000,000 and stated interest rate of 6%. The note is payable in annual installments of P2,000,000 plus accrued interest on the outstanding balance. The first installment is due on December 31, 2020. There is no established cash price for this type of aggregate equipment and the note has no ready market. The prevailing interest for a note of this type is 12%. The aggregate equipment has a cost of P12,000,000 and an accumulated depreciation of P2,600,000 as of January 1, 2020. What will be the carrying amount of the Notes Receivable as of December 31, 2022? (Use four-decimal places and round off the final answer to the nearest peso.)
p40
ss
NEED ASAP
Current Attempt in Progress On January 2, 2023, Pharoah Inc. sells goods to Coronado Company in exchange for a zero-interest-bearing note with a face value of $7.920, with payment due in 12 months. The fair value of the goods at the date of sale is $7,200 (cost $4,320). Assume that the company chooses to reflect the interest component. (a)

SEE MORE QUESTIONS

Recommended textbooks for you

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS