On October 2, 20x9, AST, Inc. ordered a custom-built passenger van from a Japanese firm. The purchase order is non-cancelable. The purchase price is 1,000,000 yens with delivery and payment to be on March 31, 20y0. On October 2, 20x9, AST, Inc. entered into a forward contract to buy 1,000,000 yens on March 31, 20y0 for P.5 3. On March 31, 20y0, the custom-built passenger van was delivered.10/2/20x9 12/31/20x9 3/31/20y0Spot rate (rupee)P.50.5 6 P .57Forward rate (rupee)53 .58 .57Accounted for as Fair Value Hedge

1. The December 31, 20x9 profit and loss statement, net foreign exchange gain or loss (forward contract

and commitment):

2. The Firm Commitment account balance as shown in the December 31, 20x9 balance sheet amounted

to:

3. What is the fair value of the forward contract on December 31, 20x9?

4. What is the fair value of the forward contract on March 31, 20y0?

5. The Firm Commitment account balance on March 31, 20y0 amounted to:

6. The value of the equipment on March 31, 20y0 if the firm commitment account will be adjusted to asset

acquired:

7. The value of the equipment on March 31, 20y0 if the firm commitment account will be will be a separate

adjustment to net income::

Accounted for as Cash Flow Hedge

8. The December 31, 20x9 profit and loss statement, foreign exchange gain or loss on hedged

item/commitment amounted to:

9. The December 31, 20x9 foreign exchange gain or loss on the hedging instrument (forward contract)

amounted to:

a. P50,000 gain, other comprehensive income

b. P50,000 gain, current earnings

c. P60,000 loss, other comprehensive income

d. P60,000 gain, current earnings

10. The Firm Commitment account balance on March 31, 20y0 amounted to:

11. The value of the equipment on March 31, 20y0 assuming that AST, Inc. has elected to adjust the cost of

non-financial items acquired:

Note: If incremental borrowing rate is given the nominal value of the forward contract is not the same with

the fair value (which is the present value of the nominal value) of the forward contract.

12. Happ, Inc. agreed to purchase merchandise from a foreign vendor on November 30, 20x9. The goods

will arrive on January 31, 20y0 and payment of 100,000 foreign currency units (FCU) due February 28,

20y0. On November 30, 2019, Happ signed an agreement with a foreign exchange broker to buy

100,000 FCUs on February 28, 2020. Exchange rates to purchase 1 FCU pound are as follows:

Nov. 30, 20x9 Dec. 31, 20x9 Jan. 31, 20y0 Feb. 28, 20y0Spot P1.65 P1.62 P1.59 P1.5730 day P1.64 P1.59 P1.60 P1.5960 day P1.63 P1.56 P1.58 P1.5890 day P1.65 P1.63 P1.64 P1.62

Because of this commitment hedge, Happ, Inc. will record the merchandise at what value when it

arrives in January?