Alpha Co. (whose functional currency is USD) bought an equipment costing EUR40,000 on credit on 1 July 2016. The equipment's estimated useful life is 8 years, with little residual value at the end of useful life. The EUR40,000 was fully paid on 1 February 2017. The EUR/USD spot rates are as follows: EUR/USD spot rates 1-Jul-16 31-Dec-16 1-Feb-17 1.27 1.3 1.31 Requirement Record the journal entries on 1 July 2016, 31 December 2016 and 1 February 2017. (Record depreciation only at year end.)

Alpha Co. (whose functional currency is USD) bought an equipment costing EUR40,000 on credit on 1 July 2016. The equipment's estimated useful life is 8 years, with little residual value at the end of useful life. The EUR40,000 was fully paid on 1 February 2017. The EUR/USD spot rates are as follows: EUR/USD spot rates 1-Jul-16 31-Dec-16 1-Feb-17 1.27 1.3 1.31 Requirement Record the journal entries on 1 July 2016, 31 December 2016 and 1 February 2017. (Record depreciation only at year end.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On Oct 1, 2015, Short company ordered some equipment from a supplier for 200,000 euros. Delivery and payment will occur on Nov 30, 2016. The spot rates on Oct 1 and Nov 30 are $1.50 and $1.30 If the forward contract is acquired, what is the overall exchange gain or loss? a. $30,000 gain O b. $10,000 gain 50 O d. $10,000 loss
On Dec 1, 2015, XYZ (a US firm) entered into a transaction to import raw materials from EU country. The account is to be settled Mar 1, 2016 with the payment of 50,000 euros. The spot rate for euros on Dec 1 was $1.4/euro and on Mar 1 was $1.44/euro. If XYZ does not hedge the pavable, raw materials will be recorded on the books on March 1, 2016 at: O a. $72,000 Ob. $70,000 O c. 50,000 euros d. None ofthe above
On 31 December 2017, PC sold used equipment with carrying amount of P2,000,000 in exchange for a non-interest bearing note of P5,000,000 requiring ten annual payments of P500,000. The first payment was mad on 31 December 2018. The market interest for similar note was 12%. (use 2 decimal places for PV factors) What is the carrying amount of the note receivable on 31 December 2017? What is the gain on sale of equipment to be recognized in 2017?
On Mei 31, 2016, PT Risa sold the item to PT Bulan (functional currency is US $) for of the total $ 30,000 invoice by November 31, 2018. The functional currency of PT Risa is IDR , and the effective date is December 31st. Exchange rate between $ and IDR: Mei 31, 2016 ($1) : Spot rate = IDR 15,575 US$1 , Forward rate (6 months) = IDR 15,375 November 31, 2016 ($1) : Spot rate = IDR 14,250 PT Risa completed the forex risk hedging transaction on November 31, 2016 by signing a forward contract to sell US $ for $ 30,000. PT Risa also chose to apply fair value hedging accounting in accordance with PSAK71. prepare journal entries recorded by PT Risa on Mei 31, 2016 and November 31, 2016. Please explain !
Our firm purchased equipment for US$100,000 on Dec 1, 2015. Our year end is December 31, and the payable is due on Jan 31, 2016. On December 1, 2015, we entered into a forward exchange contract with the bank to provide us with the US dollars on January 31, 2016. The following rates were in effect: Forward Rates: Dec1,2015; 60 day forward rate US$1= CDN$1.152 Dec 31, 2015; 30 day forward rate US$1 = CDN$ 1.162 Spot rates Dec 1, 2015 US$1 = CDN$ 1.130 Dec 31, 2015 US$1 = CDN$ 1.16 Jan 31, 2016 US$1 = CDN$ 1.210 Prepare all the journal entries arising from this transaction, from original sale to final settlement. Answer within 40mins,it would be really helpful!!
On 31 December 2017, PC sold used equipment with carrying amount of P2,000,000 in exchange for a non-interest bearing note of P5,000,000 requiring ten annual payments of P500,000. The first payment was mad on 31 December 2018. The market interest for similar note was 12%. (use 2 decimal places for PV factors) What amount should be recognized as interest income for 2018? What is the gain on sale of equipment to be recognized in 2017?
On October 1, 2017, Sharp Company (based in Denver, Colorado) entered into a forward contract to sell 100,000 rubles in four months (on January 31, 2018) and receive $39,000 in U.S. dollars. Exchange rates for the ruble follow: Date Spot rate Forward Rate (to January 31,2018) October 1, 2017 $0.35 $0.39 December 31, 2017 0.38 0.41 January 31, 2018 0.40 N/A Sharp’s incremental borrowing rate is 12 percent. The present value factor for one month at an annual interest rate of 12 percent (1 percent per month) is 0.9901. Sharp must close its books and prepare financial statements on December 31.a. Prepare journal entries, assuming that Sharp entered into the forward contract as a fair value hedge of a 100,000 ruble receivable arising from a sale made on October 1, 2017. Include entries for both the sale and the forward contract.b. Prepare journal entries, assuming that Sharp entered into the forward contract as a fair value hedge of a firm commitment related to a 100,000…
On October 1, 2017, Sharp Company (based in Denver, Colorado) entered into a forward contract to sell 210,000 rubles in four months (on January 31, 2018) and receive $105,000 in US dollars. Exhange rates for the ruble follow: Date Spot Rate Forward Rate October 1, 2017 $0.46 $0.51 December 31, 2017 0.49 0.52 January 31, 2018 0.51 N/A Sharp's incremental borrowing rate is 12 percent. The present value factor for one month at an annual interest rate of 12 percent (1 percent per month) is 0.9901. Sharp must close its books and prepare financial statements on December 31. a. Prepare journal entries, assuming that Sharp entered into forward contact as a fair value hedge of a 210,000 ruble receivable arising from a sale made on October 1, 2017. Include entries for both the sale forward contract. b. Prepare journal entries, assuming that Sharp entered into the forward contract as a fair…
In October 2014, the Malaysian Ringgit (MYR) was trading at MYR3.30 per US Dollar (USD). If the ringgit is now trading at MYR4.20 per USD, what is the percentage change in the ringgit’s value? Is this an appreciation or depreciation? A) 27.27% (Depreciation) B) 27.27% (Appreciation) C) The value remains unchanged
The following data applies to Anie Company’s purchase of 60,000 Belgium francs under a forward contract datedNovember 30, 2021, for delivery on March 1, 2022:11/30/2021 12/31/2021 03/01/2022Spot rates 55.75 53.90 54.5030-day forward rate 51.30 56.15 53.2060-day forward rate 57.65 52.30 55.7590-day forward rate 54.25 55.45 52.10Anie Company entered into the forward contract to speculate in the foreign currency. In its Income Statement for the yearended December 31, 2021, what amount of loss should the company report from this forward contract?
Brandlin Company of Anaheim, California, sells parts to a foreign customer on December 1, 2017, with payment of 16,000 korunas to be received on March 1, 2018. Brandlin enters into a forward contract on December 1, 2017, to sell 16,000 korunas on March 1, 2018. Relevant exchange rates for the koruna on various dates are as follows: Date Spot Rate Forward rate (to march 1, 2018) December 1 , 2017 $2.70 $2.775 December 31 , 2017 2.80 2.900 March 1, 2018 2.95 N/A Brandlin’s incremental borrowing rate is 12 percent. The present value factor for two months at an annual interest rate of 12 percent (1 percent per month) is 0.9803. Brandlin must close its books and prepare financial statements at December 31.a. Assuming that Brandlin designates the forward contract as a cash flow hedge of a foreign currency receivable and recognizes any premium or discount using the straight-line method, prepare journal entries for these transactions in U.S. dollars. What is the impact on 2017 net…
On October 15, 2009, Talud Limited, a Canadian company, sold a custom er in England for €10,000, when the exchange rate was €1 = $2.20. On December 31, 2009, the exchange rate at Talud's year-end was €1 = 2.25 and dropped to €1 = 2.10 on the settlement date, February 15, 2010. Record journal entries on the date of sale, year-end adjustment, and settlem ent date.