On March 1, 2021, Mattie Company received an order to sell a machine to a customer...

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On March 1, 2021, Mattie Company received an order to sell a machine to a customer in England at a price of 200,000 British pounds. The machine was shipped and payment was received on March 1, 2022. On March 1, 2021, Mattie purchased a put option giving it the right to sell 200,000 British pounds on March 1, 2022 at a price of $380,000. Mattie properly designates the option as a fair hedge of the pound firm commitment. The option cost $2,000 and had a fair value of $2,200 on December 31, 2021. The following spot exchange rates apply: Spot Date Rate March 1, 2021 $1.90 December 31, 2021 $1.89 March 1, 2022 $1.84 What was the net impact on Mattie's 2021 income as a result of this fair value hedge of a firm commitment? Multiple Choice O O O O O $2,200 increase. $2,000 increase. $1,800 increase. $1,800 decrease. $2,200 decrease. On March 1, 2021, Mattie Company received an order to sell a machine to a customer in England at a price of 200,000 British pounds. The machine was shipped and payment was received on March 1, 2022. On March 1, 2021, Mattie purchased a put option giving it the right to sell 200,000 British pounds on March 1, 2022 at a price of $380,000. Mattie properly designates the option as a fair hedge of the pound firm commitment. The option cost $2,000 and had a fair value of $2,200 on December 31, 2021. The following spot exchange rates apply: Spot Date Rate March 1, 2021 $1.90 December 31, 2021 $1.89 March 1, 2022 $1.84 What was the net impact on Mattie's 2021 income as a result of this fair value hedge of a firm commitment? Multiple Choice O O O O O $2,200 increase. $2,000 increase. $1,800 increase. $1,800 decrease. $2,200 decrease.

Answer rating: 100% (QA)

The correct option is D ie 1800 Decre... View the full answer