On November 16, 2019, a U.S. company makes a sale to a customer in Germany. Under...
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On November 16, 2019, a U.S. company makes a sale to a customer in Germany. Under the sale terms, the customer will pay the company €100,000 on March 16. On November 16, the company also enters a forward contract to sell €100,000 on March 16, 2020. On March 16, the company receives €100,000 from the customer and sells it using the forward contract. The company's accounting year ends December 31. Rates on the dates specified appear below: November 16, 2019 December 31, 2019 March 16, 2020 Select one: Spot Rate $ 1.250 1.260 1.265 What is the net effect on 2019 income of exchange rate changes due to the sale and the forward contract? A. $300 net gain B. $1,700 net gain C. $300 net loss D. no effect Forward Rate for March 16, 2020 Delivery $ 1.248 1.255 1.265 1 On November 16, 2019, a U.S. company makes a sale to a customer in Germany. Under the sale terms, the customer will pay the company €100,000 on March 16. On November 16, the company also enters a forward contract to sell €100,000 on March 16, 2020. On March 16, the company receives €100,000 from the customer and sells it using the forward contract. The company's accounting year ends December 31. Rates on the dates specified appear below: November 16, 2019 December 31, 2019 March 16, 2020 Select one: Spot Rate $ 1.250 1.260 1.265 What is the net effect on 2019 income of exchange rate changes due to the sale and the forward contract? A. $300 net gain B. $1,700 net gain C. $300 net loss D. no effect Forward Rate for March 16, 2020 Delivery $ 1.248 1.255 1.265 1
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Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1337788281
3rd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
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