a.
Introduction: Hedging is the strategy to manage the investment risk by taking the opposite position in the related assets such as shares, bonds, etc. Hedging involves derivatives such as options, futures, etc.Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.
The
b.
Introduction: Hedging is the strategy to manage the investment risk by taking the opposite position in the related assets such as shares, bonds, etc. Hedging involves derivatives such as options, futures, etc.Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.
The Journal entry to record change in intrinsic value and time value of put option as well as change in value of securities at sale.
c.
Introduction: Hedging is the strategy to manage the investment risk by taking the opposite position in the related assets such as shares, bonds, etc. Hedging involves derivatives such as options, futures, etc.Bond is an instrument issued by the companies to fulfil their need of large amount of borrowings. It is the instrument of indebtedness where issuer is obliged to pay the interest on it.
The Journal entry to record the exercise of put option and sale of securities held at sale.
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Chapter 11 Solutions
ADVANCED FINANCIAL ACCOUNTING-ACCESS
- Pablo Foods Ltd. acquires all the outstanding stock of Northern Harvest Inc. for $15 million. The fair value of Northern Harvest's assets is $10.4 million, and the fair value of its liabilities is $2.1 million. Calculate the amount paid for goodwill. Step by step answerarrow_forwardPinu Corp. has variable manufacturing costs per unit of $18, and fixed manufacturing cost per unit of $9. Variable selling and administrative costs per unit are $6, while fixed selling and administrative costs per unit are $3. Pinu Corp. uses the variable cost approach with a markup percentage of 120%. What is the appropriate target selling price?arrow_forwardSubject financial accounting 2arrow_forward
- What is the recorded point?arrow_forwardI need help with question is correct answer with accounting questionarrow_forwardMID Company had originally expected to earn operating income of $130,000 in the coming year. MID's degree of operating leverage is 3.5. Recently, MID revised its plans and now expects to increase sales by 23% next year. What is the percent change in operating income expected by MID in the coming year?arrow_forward
- 5 POINTarrow_forwardWhat is the percent change in operating income ?arrow_forwardA company's budgeted variable overheads for a period amounted to $30,000. During this period, the company spent $29,400 on variable overheads. The company's level of production was expected to require 15,000 labor hours, but the actual amount of labor hours used was only 13,500 hours. What was the variable overhead expenditure variance for the period?arrow_forward
