White Perfect Berhad, a Malaysian listed company, has regular acquisitions of silver froma Japanese supplier. Therefore, White Perfect Berhad designates a future purchase of silveras a hedged item in a cash flow hedge.On 1 January 2017, White Perfect Berhad purchased the silver. On the same date, acumulative gain on the hedging instrument of RM6 million had been credited to othercomprehensive income.At the year end of 31 December 2017, the carrying amount of the silver was RM16 millionand its net realizable value was RM12 million. The silver was finally sold on 31 March2018 for RM12.4 million.Required:Show how White Perfect Berhad should recognize and measure the cash flow hedge forthe year 2017. and 2018.

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Required: Show how White Perfect Berhad should recognize and measure the cash flow hedge for the year 2017 and 2018.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

White Perfect Berhad, a Malaysian listed company, has regular acquisitions of silver from
a Japanese supplier. Therefore, White Perfect Berhad designates a future purchase of silver
as a hedged item in a cash flow hedge.
On 1 January 2017, White Perfect Berhad purchased the silver. On the same date, a
cumulative gain on the hedging instrument of RM6 million had been credited to other
comprehensive income.
At the year end of 31 December 2017, the carrying amount of the silver was RM16 million
and its net realizable value was RM12 million. The silver was finally sold on 31 March
2018 for RM12.4 million.
Required:
Show how White Perfect Berhad should recognize and measure the cash flow hedge for
the year 2017. and 2018.

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