Business
Advanced Financial Accounting
On November 30, 20X5, P&P Company of Nova Scotia, Canada,

On November 30, 20X5, P&P Company of Nova Scotia, Canada, hedges the forecasted sale on February 1,

Question:

On November 30, 20X5, P&P Company of Nova Scotia, Canada, hedges the forecasted sale on February 1, 20X6 of ‚¬1,000,000 of blueberries to Compagnie Souris, a company headquartered in France. P&P Company has a December 31 fiscal year-end. The following are the relevant exchange rates:

Forward rate to February 1, 20X6 1.4600 1.5210 Date Event Forecasted sale SFP date Blueberries delivered and forward con

Assume that this transaction qualifies as a cash-flow hedge under hedge accounting rules.

Required
Prepare journal entries to record the above activities on P&P Company€™s books in 20X5 and 20X6.

Transcribed Image Text:

Forward rate to February 1, 20X6 1.4600 1.5210 Date Event Forecasted sale SFP date Blueberries delivered and forward contract settled Spot rate 1€-$1.4500 November 30, 20x5 December 31, 2X5 February 1, 20X6 1€=$1.5150 1€=$1.5300 n/a-settlement date

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Cash Flow Hedge Accounting Gross Method Net Method November 30 20X5 Forward contract receivable C 14...View the full answer

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Advanced Financial Accounting

ISBN: 978-0132928939

7th edition

Authors: Thomas H. Beechy, V. Umashanker Trivedi, Kenneth E. MacAulay

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Question Posted: May 24, 2018 10:16 AM

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