Refer to E16-2. Assume the same facts except that the forward contract is a futures contract that
Question:
Refer to E16-2. Assume the same facts except that the forward contract is a futures contract that trades on the Futures Exchange. On January 1, 2017, Roper is required to deposit $65 with the stock- broker as a margin.
Instructions (a) Prepare the journal entries for the day the futures contract was signed. (b) Prepare the journal entries to recognize the changes in the fair value of the futures contract. (c) Prepare the journal entries that would be required if Roper settled the contract on a net basis on April 1, 2017.
Data From E16-2:
On January 1, 2017, Roper Inc. agrees to buy 3 kilos of gold at $40,000 per kilo from Golden Corp on April 1, 2017, but does not intend to take delivery of the gold. On the day that the contract was entered into, the fair value of this forward contract was zero. The fair value of the forward subsequently fluctuated as follows:
On the settlement date, the spot price of gold is $41,000 per kilo. Assume that Roper complies with IFRS.
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a Prepare the journal entries for the day the futures contract was signed When the futures contract was signed on January 1 2017 Roper Inc is required ...View the full answer
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