1. On December 1, 2020, SYMBOLIC CORPORATION a Philippine company, entered into a 4-month forward contract to...

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Question:

1. On December 1, 2020, SYMBOLIC CORPORATION a Philippine company, entered into a 4-month forward contract to purchase $250,000 for speculative purposes.SYMBOLIC’s accounting year ends on December 31.

Relevant exchange rates are as follows:

Date	Spot Rate	Forward Rate (to 3/31/21)
12/01/2020	P 45.00	P 45.50
12/31/2020	46.00	46.10
01/31/2021	45.60	45.70
02/28/2021	45.40	45.55
03/31/2021	45.10

How much exchange difference [gain/ (loss)] will be reported from this forward contract in 2021?

2. The TAGALOG CORPORATION purchases merchandise from a foreign exporter on November 15, 20x4 for FC 100,000, payable in that currency on January 15, 20x5. TAGALOG predicts the Philippine peso might probably weaken against the foreign currency over the 60-day period and entered into a hedge of the exposed foreign currency amount against the risk of exchange losses. The hedging relationship was designed in a way that it would be fully effective thru the entire hedge period and selected a forward contract for that purpose.

The following are relevant spot and forward rates at selected dates.

	11/15/x4	12/31/x4	01/15/x5
Spot Rates	P 0.4925	P 0.4245	P 0.4345
Forward Rates	P 0.4325	P 0.4300	P 0.4345

a. How much was the transaction gain or (loss) recognized on the forward contract on December 31, 20x4?

b. How much was the overall transaction gain or (loss) over the hedging relationship?

3. Tagalog Company sold merchandise to a foreign vendor for FC90,000 on November 1, 20x4. Payment is due on January 30, 20x5. Also, on November 1, 20x4 Tagalogentered into a 90-day forward contract to sell FC90,000 on January 30, 20x5.

Exchange rates for the FC at different dates are as follows:

	Nov. 1, 20x4	Dec. 31, 20x4	January 30, 20x5
Spot Rate	P 71.4	P 72.7	P 71.9
30-day forward	72.3	72.5	73.2
60-day forward	71.8	72.2	72.6
90-day forward	71.0	72.6	73.4

How much is the cost [net gain / (loss)]to Tagalog Company for hedging the FC90,000 Accounts receivable for any unfavorable movements of the exchange rate?