Explain the way of accounting for a forward contract used as a cash flow hedge of a foreign-currency-denominated asset or liability.

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Answer 1

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Chapter 6, Problem 14Q

(a)

To determine

Explain the way of accounting for a forward contract used as a cash flow hedge of a foreign-currency-denominated asset or liability.

(b)

To determine

Explain the way of accounting for a forward contract used as a fair value hedge of a foreign-currency firm commitment.

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Please provide the correct answer to this general accounting problem using accurate calculations.

Preston Manufacturing uses a standard costing system that allows 2.5 pounds of direct materials for one finished unit. During August, the company purchased 35,000 pounds of direct materials for $175,000 and manufactured 12,600 finished units. The standard direct materials cost allowed for the units manufactured is $126,000. The performance report shows that Preston has an unfavorable direct materials usage variance of $5,040. Also, the company records any price variance for materials at time of purchase. The number of pounds of direct materials used to produce August's output was__ pounds.

Answer 2

Question

Chapter 6, Problem 14Q

(a)

To determine

Explain the way of accounting for a forward contract used as a cash flow hedge of a foreign-currency-denominated asset or liability.

(b)

To determine

Explain the way of accounting for a forward contract used as a fair value hedge of a foreign-currency firm commitment.

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Answer 3

Question

Chapter 6, Problem 14Q

(a)

To determine

Explain the way of accounting for a forward contract used as a cash flow hedge of a foreign-currency-denominated asset or liability.

(b)

To determine

Explain the way of accounting for a forward contract used as a fair value hedge of a foreign-currency firm commitment.

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Answer 4

Question

Chapter 6, Problem 14Q

(a)

To determine

Explain the way of accounting for a forward contract used as a cash flow hedge of a foreign-currency-denominated asset or liability.

(b)

To determine

Explain the way of accounting for a forward contract used as a fair value hedge of a foreign-currency firm commitment.

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Answer 5

Chapter 6, Problem 14Q

(a)

To determine

Explain the way of accounting for a forward contract used as a cash flow hedge of a foreign-currency-denominated asset or liability.

(b)

To determine

Explain the way of accounting for a forward contract used as a fair value hedge of a foreign-currency firm commitment.

Answer 6

Chapter 6, Problem 14Q

(a)

To determine

Explain the way of accounting for a forward contract used as a cash flow hedge of a foreign-currency-denominated asset or liability.

Answer 7

Chapter 6, Problem 14Q

(a)

To determine

Explain the way of accounting for a forward contract used as a cash flow hedge of a foreign-currency-denominated asset or liability.

Answer 8

(b)

To determine

Explain the way of accounting for a forward contract used as a fair value hedge of a foreign-currency firm commitment.

Answer 9

(b)

To determine

Explain the way of accounting for a forward contract used as a fair value hedge of a foreign-currency firm commitment.

Answer 10

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Answer 13

Ch. 6 - Prob. 1Q Ch. 6 - 2. A company makes an export sale denominated in a...Ch. 6 - 3. What factors create a foreign exchange gain on...Ch. 6 - 4. What does the word hedging mean? Why do...Ch. 6 - 5. How does a foreign currency option differ from...Ch. 6 - 6. How does the timing of hedges of the following...Ch. 6 - 7. Why might a company prefer a foreign currency...Ch. 6 - 8. How are foreign currency derivatives such as...Ch. 6 - 9. How is the fair value of a foreign currency...Ch. 6 - Prob. 10Q

Explain the way of accounting for a forward contract used as a cash flow hedge of a foreign-currency-denominated asset or liability.

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Explain the way of accounting for a forward contract used as a cash flow hedge of a foreign-currency-denominated asset or liability.

Explain the way of accounting for a forward contract used as a fair value hedge of a foreign-currency firm commitment.

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