On November 1, 2013, JEZ corporation contracted to purchase William and Kate memorabilia from England for 30,000 pounds (£). The memorabilia was to be delivered on January 30, 2014, and payment would be due on March 1, 2014. On November 1, 2013, JEZ corporation entered into a 120-day forward contract to receive £30,000 at a forward rate of £1 = C$1.59. The forward contract was acquired to hedge the financial component of the foreign currency commitment. JEZ follows IFRS.
Additional information and data for the exchange rate is: Spot and exchange rates are:
(a) What is JEZ’s net exposure to changes in the exchange rate of pounds for dollars between November 1, 2013, and March 1, 2014?
(b) Prepare all journal entries from November 1, 2013, through March 1, 2014, for the purchase of the memorabilia, the forward exchange contract, and the foreign currency transaction. Assume JEZ’s fiscal year ends on December 31, 2013.

  • CreatedJune 09, 2015
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