Pink has just sold equipment to Black. Pink is a US company that has USD accounting. The
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Question:
Pink has just sold equipment to Black. Pink is a US company that has USD accounting. The sale date is March 2020 and the payment date is September 2020.
Deal amount €2 000 000
Spot March = $1.20/€
6-month forward contract = $1.14€
Spot September forecast = $1.16/€
Eurozone 6-month borrowing rate = 2.0%/year
If Pink hedges 50% of the exposure with forward contracts, then foreign exchange gains/(losses) are _________
Related Book For
Intermediate Accounting
ISBN: 978-0071339476
Volume 1, 6th Edition
Authors: Beechy Thomas, Conrod Joan, Farrell Elizabeth, McLeod Dick I
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