On September 1, 2009 Philips corporation sold merchandise to a foreign customer for 300,000 brazilian real with
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Question:
On September 1, 2009 Philips corporation sold merchandise to a foreign customer for 300,000 brazilian real with payment to be received on March 1, 2010. At the date of sale, Philips entered into a six month forward contract to sell 300,000 reals. The forward contract was properly designated as a fair value hedge. The following exchange rates apply:
Philips' incremental borrowing rate is 12%, ne present value factor for four months at an annual interest rate of 12% is .9610. The net increase/decrease from the above transaction in net income for 2009 is
Multple Choice
- $141351
- $6,000
- $138,000
- $156,000
- $18,000
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