Question 13 0/0.5 pts On September 1, 2018, Bauer Inc. has 10,000 ounces of silver, with an average cost of $13 per ounce, in inventory. The spot price for silver is $16 per ounce. Bauer decides to retain the inventory until mid-January 2019, hoping that the price increases to $17 per ounce. To hedge its position, Bauer sells future contracts to sell 10,000 ounces of silver at $17 per ounce on January 20, 2019. The firm applies fair value hedge accounting. The market spot rates and future prices for silver are as follows: January 20 Spot Price 2019 Future Price September 1, $ 16 $ 17 2018 December 31, 2018 January 20, 2019 $14.50 $15.50 $ 16.80 $ 16.80 What 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. $130,000 nswer $115,000 $105,000 $145,000 wered None of the above.

Question 13 0/0.5 pts On September 1, 2018, Bauer Inc. has 10,000 ounces of silver, with an average cost of $13 per ounce, in inventory. The spot price for silver is $16 per ounce. Bauer decides to retain the inventory until mid-January 2019, hoping that the price increases to $17 per ounce. To hedge its position, Bauer sells future contracts to sell 10,000 ounces of silver at $17 per ounce on January 20, 2019. The firm applies fair value hedge accounting. The market spot rates and future prices for silver are as follows: January 20 Spot Price 2019 Future Price September 1, $ 16 $ 17 2018 December 31, 2018 January 20, 2019 $14.50 $15.50 $ 16.80 $ 16.80 What 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. $130,000 nswer $115,000 $105,000 $145,000 wered None of the above.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

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

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

ChapterM: Time Value Of Money Module

Section: Chapter Questions

Problem 1C

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