The following information applies to questions #12a and #12b below: Amazing Corporation (a U.S.-based company) sold...

 

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The following information applies to questions #12a and #12b below: Amazing Corporation (a U.S.-based company) sold parts to a customer in Wales on October 1, 2015, for £100,000 with payment due on April 1, 2016. Relevant exchange rates are: Date October 1, 2015. December 31, 2015 April 1, 2016. Spot Rate $1.88 1.85 1.90 Forward Rate (to 04-01-2016) $1.85 1.84 The present value factor corresponding to the company's incremental borrowing rate for time period involved is 0.9500. Question #12a: Export sale of goods to foreign buyer with future payment due in foreign currency with no forward contract Required: Assuming no forward contract was entered into, how much foreign exchange gain or loss should Amazing Corporation report on its December 31, 2015, income statement with regard to this transaction? Please show your work: Question #12b: Sale to foreign customer with purchase of forward contract Required: Assume on October 1, 2015, Amazing Corporation signed a forward contract to sell £100,000 on April 1, 2016. How and at what amount should Amazing Corporation classify/report the forward contract on its December 31, 2015 financial statements? Please show your work. Please show your work: The following information applies to questions #12a and #12b below: Amazing Corporation (a U.S.-based company) sold parts to a customer in Wales on October 1, 2015, for £100,000 with payment due on April 1, 2016. Relevant exchange rates are: Date October 1, 2015. December 31, 2015 April 1, 2016. Spot Rate $1.88 1.85 1.90 Forward Rate (to 04-01-2016) $1.85 1.84 The present value factor corresponding to the company's incremental borrowing rate for time period involved is 0.9500. Question #12a: Export sale of goods to foreign buyer with future payment due in foreign currency with no forward contract Required: Assuming no forward contract was entered into, how much foreign exchange gain or loss should Amazing Corporation report on its December 31, 2015, income statement with regard to this transaction? Please show your work: Question #12b: Sale to foreign customer with purchase of forward contract Required: Assume on October 1, 2015, Amazing Corporation signed a forward contract to sell £100,000 on April 1, 2016. How and at what amount should Amazing Corporation classify/report the forward contract on its December 31, 2015 financial statements? Please show your work. Please show your work:

Answer rating: 100% (QA)

a C Solution The transaction has entered between a US based Company and a german Compnay Amazing Cor... View the full answer