On 1 April 2021 Paradise Ltd, an Australia entity, places an order for US$3.5 million of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On 1 April 2021 Paradise Ltd, an Australia entity, places an order for US$3.5 million of inventory with Blue Ltd, a US supplier. The goods will be purchased FOB New York. A decision is made to take out a foreign exchange forward-rate contract for US$3.5 million on 1 April 2021 with the Bank in which the Bank agrees to supply Paradise Ltd with US$3.5 million on 1 August 2021. The goods are shipped on 1 June 2021 and are paid for on 1 August 2021. Relevant exchange rates are as follows Spot rate A$1= US$0.92 A$1= US$0.89 A$1= US$0.85 A$1= US$0.88 Date Forward rate 1 April 2021 1 June 2021 30 June 2021 A$1= US$0.89 A$1= US$0.86 A$1= US$0.82 A$1= US$0.88 1 August 2021 Assume that the hedging arrangement satisfies the requirements for hedge accounting as stipulated in AASB 9 'Financial Instruments', and the management of Paradise Ltd adopts Cash flow hedge accounting. Required: (a) Prepare a table showing Gains/losses on the hedging instrument. (b) Provide the journal entries for Paradise Ltd to account for the hedge [Narrations are not required]. On 1 April 2021 Paradise Ltd, an Australia entity, places an order for US$3.5 million of inventory with Blue Ltd, a US supplier. The goods will be purchased FOB New York. A decision is made to take out a foreign exchange forward-rate contract for US$3.5 million on 1 April 2021 with the Bank in which the Bank agrees to supply Paradise Ltd with US$3.5 million on 1 August 2021. The goods are shipped on 1 June 2021 and are paid for on 1 August 2021. Relevant exchange rates are as follows Spot rate A$1= US$0.92 A$1= US$0.89 A$1= US$0.85 A$1= US$0.88 Date Forward rate 1 April 2021 1 June 2021 30 June 2021 A$1= US$0.89 A$1= US$0.86 A$1= US$0.82 A$1= US$0.88 1 August 2021 Assume that the hedging arrangement satisfies the requirements for hedge accounting as stipulated in AASB 9 'Financial Instruments', and the management of Paradise Ltd adopts Cash flow hedge accounting. Required: (a) Prepare a table showing Gains/losses on the hedging instrument. (b) Provide the journal entries for Paradise Ltd to account for the hedge [Narrations are not required].
Expert Answer:
Answer rating: 100% (QA)
Solution Step All amount aue in Aus Step 2 a following is the takle showing gain Los... View the full answer
Posted Date:
Students also viewed these accounting questions
-
On May 2, 2013, Vacation Paradise received its April bank statement from First City Bank and Trust. Enclosed with the bank statement, which appears below, was a debit memorandum for $160 that covered...
-
35) DNA was incorporated on January 2, 20X0, and commenced active operations immediately. Common shares were issued on the date of incorporation and no new common shares have been issued since then....
-
An increase in the wage will lead a worker to reduce hours work if, A. leisure is normal and the IE dominates the SE B. leisure is inferior and the SE dominates the IE C. leisure is normal and the SE...
-
Solve the equation symbolically. Then solve the related inequality. 1 - X
-
Alfred Lowenstein is the president of the research division for Better Health, Inc., a major pharmaceutical company. His most important project coming up is the development of a new drug to combat...
-
If F1 = F2 = 30 lb. determine the angles ? and ? so that the resultant force is directed along the positive x axis and has a magnitude of FR = 20 lb.. 15 8 F
-
From the point of view of each observer in Figure 6.7, (a) is the energy of each cart constant? (b) Is the isolated system containing cart 1 closed? (c) Is the isolated system containing cart 2...
-
John and Joanne have 2 children, Joe, 16, and Jamie, 4. John is self-employed, and Joanne works as a swimming coach for Local University. Johns business is manufacturing Jaugernauts. Through the...
-
7. 8. The work done by a gas molecule in an isolated system is given by W=ae KT, where x is the displacement, k is the Boltzmann constant and T is the temperature. and are constants. Then the...
-
You counted the petty cash fund balance of Rainbow Corporation at 9:00 o' clock in the morning of January 4, 2022, and you obtained the following details: Bills and coins Paid vouchers (all dated...
-
A company uses an overhead rate of $800 per setup. The following information is provided: Total manufacturing overhead - $1,248,000, Total Machine Setup Cost - $148,000 and Set ups for Product X - 8...
-
The potential energy, U, of two atoms a distance, r, apart is U=-(A/r^m)+(B/r^n), where m=2 n=10. Given that the atoms form a stable molecule at a separation of r0= .4nm with a negative energy of...
-
Following are the non-strategic investment transactions of Corona Inc.: 2020 Jan. 1 Purchased for $79,112 an 8.5%, $76,000 bond that matures in 10 years from Hanna Corporation when the market...
-
The Williamson Corporation wants to help its employees save for retirement by allowing them to defer part of their compensation on a pretax basis that the company would match. The best option for...
-
1. Calculate the mass of a molecule of N2O3. The atomic masses of N and O are 14.01 amu/atom and 16.00 amu/atom respectively. 2. Calculate the mass of 4.8 mol of N2(H5C3)4. The molar masses of N, H...
-
In below picture, the Temperature-Time-Transition (TTT) diagram for a glass forming material is shown: temperature T. m I 1 ppm 1% crystal time
-
Case : GOLDEN WHEAT BAKER Goals: Know and diagnose the situation of human resources of a company through through the development of an audit process. Propose a set of organizational strategies that...
-
Find a least expensive route, in monthly lease charges, between the pairs of computer centers in Exercise 11 using the lease charges given in Figure 2. a) Boston and Los Angeles b) New York and San...
-
Discuss how yields anticipate future economic activity.
-
Select the circumstance in which the impact on government bond yields of a new source of revenue (such as a natural resource discovery) would be largest. Explain your choice. a. Before the discovery,...
-
Suppose that the interest rate on one-year bonds is 4 percent and is expected to be 5 percent in one year and 6 percent in two years. Using the expectations hypothesis, compute the yields in two- and...
Study smarter with the SolutionInn App