Richard Smith Ltd is an Australian retailer that sells a wide range of consumer electronic goods...

 

Transcribed Image Text:

Richard Smith Ltd is an Australian retailer that sells a wide range of consumer electronic goods through a network of retail shops and online. Recently, one of the company's directors, Karen Brown, expressed interest in the company making use of forward contracts. Because Karen does not know much about forward contracts, she has requested the company's Chief Accountant, Elizabeth Wright, to provide her with some basic information. Elizabeth Wright has requested that you draft a memorandum to Karen Brown for her signature. Required Draft a memorandum addressed to Karen Brown for Elizabeth Wright to sign that explains forward contracts. An example of the memorandum format is included at the end of this assignment. Your memorandum should address the following topics: Explain how forward contracts (including forward contracts for shares) can be settled. Explain how forward contracts would be classified under AASB 9 Financial Instruments? What are the recognition and derecognition criteria for forward contracts? Explain the measurement requirements (on initial recognition and subsequent to initial recognition) for forward contracts in AASB 9 Financial Instruments. Richard Smith Ltd is an Australian retailer that sells a wide range of consumer electronic goods through a network of retail shops and online. Recently, one of the company's directors, Karen Brown, expressed interest in the company making use of forward contracts. Because Karen does not know much about forward contracts, she has requested the company's Chief Accountant, Elizabeth Wright, to provide her with some basic information. Elizabeth Wright has requested that you draft a memorandum to Karen Brown for her signature. Required Draft a memorandum addressed to Karen Brown for Elizabeth Wright to sign that explains forward contracts. An example of the memorandum format is included at the end of this assignment. Your memorandum should address the following topics: Explain how forward contracts (including forward contracts for shares) can be settled. Explain how forward contracts would be classified under AASB 9 Financial Instruments? What are the recognition and derecognition criteria for forward contracts? Explain the measurement requirements (on initial recognition and subsequent to initial recognition) for forward contracts in AASB 9 Financial Instruments.

Answer rating: 100% (QA)

Draft Memorandum A forward contract is a customized contract between two parties to buy or sell an asset at a specified price on a future date A forwa... View the full answer