Soft Bound Version for Advanced Accounting 13th Edition
13th Edition
ISBN: 9781260110579
Author: Hoyle
Publisher: McGraw Hill Education
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Chapter 9, Problem 14P
Torres Corporation (a U.S.-based company) expects to order goods from a foreign supplier at a price of 100,000 pounds, with delivery and payment to be made on September 20. On July 20, Torres purchased a two-month call option on 100,000 pounds and designated this option as a
- a. $300
- b. $600
- c. $2,000
- d. $5,000
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Shandra Corporation (a U.S.-based company) expects to order goods from a foreign supplier at a price of 100,000 pounds, with delivery and payment to be made on April 20. On February 20, when the spot rate is $1.36 per pound, Shandra purchases a two-month call option on 100,000 pounds and designates this option as a cash flow hedge of a forecasted foreign currency transaction. The time value of the option is excluded in assessing hedge effectiveness; the change in time value is recognized in net income over the life of the option. The option has a strike price of $1.36 per pound and costs $1,000. The goods are received and paid for on April 20. Shandra sells the imported goods in the local market by May 31. The spot rate for pounds is $1.41 on April 20. What amount will Shandra Corporation report as foreign exchange gain or loss in net income for the quarter ended June 30?
$5,000.
$0.
$1,000.
$2,000.
Shandra Corporation (a U.S. -based company) expects to order goods from a foreign supplier at a price
of 117,000 pounds, with delivery and payment to be made on June 15. On April 15, when the spot rate is
$1.31 per pound, Shandra purchases a two-month call option on 117,000 pounds and designates this
option as a cash flow hedge of a forecasted foreign currency transaction. The time value of the option is
excluded in assessing hedge effectiveness; the change in time value is recognized in net income over the
life of the option. The option has a strike price of $1.31 per pound and costs $1, 170. The goods are
received and paid for on June 15. Shandra sells the imported goods in the local market immediately. The
spot rate for pounds is $1.360 on June 15. a-1. Prepare all journal entries for Shandra Corporation related
to this transaction and hedge. a-2. What amount should Shandra Corporation report in net income as
cost of goods sold for the quarter ending June 30? b. What amount should…
Shandra Corporation (a U.S.-based company) expects to order goods from a foreign supplier at a price of 119,000 pounds, with
delivery and payment to be made on June 15. On April 15, when the spot rate is $1.46 per pound, Shandra purchases a two-month call
option on 119,000 pounds and designates this option as a cash flow hedge of a forecasted foreign currency transaction. The time
value of the option is excluded in assessing hedge effectiveness; the change in time value is recognized in net income over the life of
the option. The option has a strike price of $1.46 per pound and costs $1,190. The goods are received and paid for on June 15. Shandra
sells the imported goods in the local market immediately. The spot rate for pounds is $1.510 on June 15.
Required:
a-1. Prepare all journal entries for Shandra Corporation related to this transaction and hedge.
a-2. What amount should Shandra Corporation report in net income as cost of goods sold for the quarter ending June 30?
b. What amount…
Chapter 9 Solutions
Soft Bound Version for Advanced Accounting 13th Edition
Ch. 9 - Prob. 1QCh. 9 - Prob. 2QCh. 9 - What factors create a foreign exchange gain on a...Ch. 9 - In what way is the accounting for a foreign...Ch. 9 - Prob. 5QCh. 9 - How does a foreign currency option differ from a...Ch. 9 - Prob. 7QCh. 9 - Why would a company prefer a foreign currency...Ch. 9 - How do companies report foreign currency...Ch. 9 - How does a company determine the fair value of a...
Ch. 9 - What is hedge accounting?Ch. 9 - Prob. 12QCh. 9 - What are the differences in accounting for a...Ch. 9 - What are the differences in accounting for a...Ch. 9 - What are the differences in accounting for a...Ch. 9 - Prob. 16QCh. 9 - Prob. 1PCh. 9 - Prob. 2PCh. 9 - Prob. 3PCh. 9 - Prob. 4PCh. 9 - Prob. 5PCh. 9 - Grace Co. had a Chinese yuan payable resulting...Ch. 9 - Prob. 7PCh. 9 - Prob. 8PCh. 9 - Prob. 9PCh. 9 - Prob. 10PCh. 9 - Prob. 11PCh. 9 - Prob. 12PCh. 9 - On March 1, Pimlico Corporation (a U.S.-based...Ch. 9 - Torres Corporation (a U.S.-based company) expects...Ch. 9 - Prob. 15PCh. 9 - What was the net impact on Jensen Companys 2018...Ch. 9 - What was the net increase or decrease in cash flow...Ch. 9 - What is the net impact on Micros net income for...Ch. 9 - What is the net impact on Micros net income for...Ch. 9 - What is Micros net increase or decrease in cash...Ch. 9 - What is the net impact on Dos Santos Companys 2017...Ch. 9 - Prob. 22PCh. 9 - Prob. 23PCh. 9 - Prob. 24PCh. 9 - Prob. 25PCh. 9 - Prob. 26PCh. 9 - Prob. 27PCh. 9 - Prob. 28PCh. 9 - Prob. 29PCh. 9 - Prob. 30PCh. 9 - Prob. 31PCh. 9 - Use the same facts as in Problem 31 except that...Ch. 9 - On June 1, Alexander Corporation sold goods to a...Ch. 9 - On June 1, Cairns Corporation purchased goods...Ch. 9 - Prob. 35PCh. 9 - Prob. 36PCh. 9 - Prob. 37PCh. 9 - Prob. 38PCh. 9 - Prob. 39PCh. 9 - Prob. 40PCh. 9 - Based on past experience, Leickner Company expects...Ch. 9 - Prob. 42PCh. 9 - RESEARCH CASEINTERNATIONAL FLAVORS AND FRAGRANCES...Ch. 9 - Prob. 2DYSCh. 9 - Prob. 3DYSCh. 9 - ANALYSIS CASECASH FLOW HEDGE On February 1, 2017,...Ch. 9 - Prob. 5DYSCh. 9 - COMMUNICATION CASEFORWARD CONTRACTS AND OPTIONS...
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