Use ue ume our U.S.-based company's functional currency is the SUS and it enters into a...
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Use ue ume our U.S.-based company's functional currency is the SUS and it enters into a forecasted transaction England-based retailer on December 1, 2018. The forecasted transaction requires our company to with an ll 75.000 units of an inventory item costing £12 each to the English company. Our company is contractu- lly committed to ship the inventory (i.e., title transfers) on March 1, 2019, with payment in British pounds a the same date. Our company does recurring business with the English company, but this arrangement does not qualify as a firm commitment. Also assume, on December 1, 2018, our company enters into a contract with a foreign currency exchange broker to sell British pounds (for settlement on March 1, 2019) 10 mitigate the risk of exchange rate fluctuation. This derivative qualifies as a cash flow hedge. The relevant exchange rates and related balances for the period from December 1, 2018, to March 1, 2019, are as follows: Derivative-Forward Spot Rate (SUS = £1) Forward Rate" Date (SUS = £1) FV Change in FV %3D %3D 1.32 1.37 December 1, 2018 December 31, 2018 March 1, 2019. . S(63,000) (81,000) S(63,000) (18,000) 1.41 1.44 1.46 1.46 *For settlement on March 1, 2019 *Ignore discounting in the computation of fair values. *. Recording transactions qualifying as cash flow hedges of forecasted foreign-currency- denominated sales or the quarter ended December 31, 2018, what net amount will our company recognize as sales? a. $0 c. S1.269,000 d. $1.296,000 b. $1,188,000 Use ue ume our U.S.-based company's functional currency is the SUS and it enters into a forecasted transaction England-based retailer on December 1, 2018. The forecasted transaction requires our company to with an ll 75.000 units of an inventory item costing £12 each to the English company. Our company is contractu- lly committed to ship the inventory (i.e., title transfers) on March 1, 2019, with payment in British pounds a the same date. Our company does recurring business with the English company, but this arrangement does not qualify as a firm commitment. Also assume, on December 1, 2018, our company enters into a contract with a foreign currency exchange broker to sell British pounds (for settlement on March 1, 2019) 10 mitigate the risk of exchange rate fluctuation. This derivative qualifies as a cash flow hedge. The relevant exchange rates and related balances for the period from December 1, 2018, to March 1, 2019, are as follows: Derivative-Forward Spot Rate (SUS = £1) Forward Rate" Date (SUS = £1) FV Change in FV %3D %3D 1.32 1.37 December 1, 2018 December 31, 2018 March 1, 2019. . S(63,000) (81,000) S(63,000) (18,000) 1.41 1.44 1.46 1.46 *For settlement on March 1, 2019 *Ignore discounting in the computation of fair values. *. Recording transactions qualifying as cash flow hedges of forecasted foreign-currency- denominated sales or the quarter ended December 31, 2018, what net amount will our company recognize as sales? a. $0 c. S1.269,000 d. $1.296,000 b. $1,188,000 LO2 25. Recording transactions qualifying as cash flow hedges of forecasted foreign-currency- denominated sales For the quarter ended December 31, 2018, what amount will our company recognize in other compre- hensive income? The gains and losses will net to $0 in other comprehensive income b. $63,000 of gains in other comprehensive income $63,000 of losses in other comprehensive income d. $81.000 of gains in other comprehensive income a. C. Use ue ume our U.S.-based company's functional currency is the SUS and it enters into a forecasted transaction England-based retailer on December 1, 2018. The forecasted transaction requires our company to with an ll 75.000 units of an inventory item costing £12 each to the English company. Our company is contractu- lly committed to ship the inventory (i.e., title transfers) on March 1, 2019, with payment in British pounds a the same date. Our company does recurring business with the English company, but this arrangement does not qualify as a firm commitment. Also assume, on December 1, 2018, our company enters into a contract with a foreign currency exchange broker to sell British pounds (for settlement on March 1, 2019) 10 mitigate the risk of exchange rate fluctuation. This derivative qualifies as a cash flow hedge. The relevant exchange rates and related balances for the period from December 1, 2018, to March 1, 2019, are as follows: Derivative-Forward Spot Rate (SUS = £1) Forward Rate" Date (SUS = £1) FV Change in FV %3D %3D 1.32 1.37 December 1, 2018 December 31, 2018 March 1, 2019. . S(63,000) (81,000) S(63,000) (18,000) 1.41 1.44 1.46 1.46 *For settlement on March 1, 2019 *Ignore discounting in the computation of fair values. *. Recording transactions qualifying as cash flow hedges of forecasted foreign-currency- denominated sales or the quarter ended December 31, 2018, what net amount will our company recognize as sales? a. $0 c. S1.269,000 d. $1.296,000 b. $1,188,000 Use ue ume our U.S.-based company's functional currency is the SUS and it enters into a forecasted transaction England-based retailer on December 1, 2018. The forecasted transaction requires our company to with an ll 75.000 units of an inventory item costing £12 each to the English company. Our company is contractu- lly committed to ship the inventory (i.e., title transfers) on March 1, 2019, with payment in British pounds a the same date. Our company does recurring business with the English company, but this arrangement does not qualify as a firm commitment. Also assume, on December 1, 2018, our company enters into a contract with a foreign currency exchange broker to sell British pounds (for settlement on March 1, 2019) 10 mitigate the risk of exchange rate fluctuation. This derivative qualifies as a cash flow hedge. The relevant exchange rates and related balances for the period from December 1, 2018, to March 1, 2019, are as follows: Derivative-Forward Spot Rate (SUS = £1) Forward Rate" Date (SUS = £1) FV Change in FV %3D %3D 1.32 1.37 December 1, 2018 December 31, 2018 March 1, 2019. . S(63,000) (81,000) S(63,000) (18,000) 1.41 1.44 1.46 1.46 *For settlement on March 1, 2019 *Ignore discounting in the computation of fair values. *. Recording transactions qualifying as cash flow hedges of forecasted foreign-currency- denominated sales or the quarter ended December 31, 2018, what net amount will our company recognize as sales? a. $0 c. S1.269,000 d. $1.296,000 b. $1,188,000 LO2 25. Recording transactions qualifying as cash flow hedges of forecasted foreign-currency- denominated sales For the quarter ended December 31, 2018, what amount will our company recognize in other compre- hensive income? The gains and losses will net to $0 in other comprehensive income b. $63,000 of gains in other comprehensive income $63,000 of losses in other comprehensive income d. $81.000 of gains in other comprehensive income a. C.
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Solution 24 Option a is correct Zero Sales will be recog... View the full answer
Related Book For
Financial Accounting A User Perspective
ISBN: 978-0470676608
6th Canadian Edition
Authors: Robert E Hoskin, Maureen R Fizzell, Donald C Cherry
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