Home Products Inc. (HPI) entered into a contract on June 30, Year 1, to buy 750,000 pounds of aluminum siding on September30, Year 1, at a price of $18.25 a pound. The company's troasurer simultaneously took a short position in a forward contact byagreeing to sell 750,000 pounds of aluminum at a price of $16 50 a pound on September 30, Year 1. Assume the followingprices for aluminum siding and the aluminum forward contract.June 30 Year 1 September 30 Year 1Aluminum siding / lb.$18.25$17 95$16.50$16.32Aluminum forward / IbBased on the above what is the earnings effect of the aluminum siding purchase commitment with the corresponding fair valuehedge at the September 30, Year 1 end?

In order to solve the problem, the corporation has agreed to purchase 750000 pounds of aluminum…

Answered: Home Products Inc. (HPI) entered into a…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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18) Hopner Products enters into a contract with Tulles to sell three different products. The total transaction price is $350,000. Each of the products is a separate performance obligation. Based on the information presented in the table, what is the allocated transaction price of product Z using the adjusted market assessment approach? (Round intermediary percentages to the nearest hundredth percent, and round your final answer to the nearest whole number.) Product X Y Z A) $104,055 B) $116,286 C) $116,667 D) $90,000 Standalone Price Market Price $130,000 $110,000 $120,000 $150,000 Not Available $110,000
CleanAir Ltd (CAL) is a company specializing in design and installation of air-purifying systems in residential, office and light commercial properties. It sells air purifiers (with brand name of “FreeAir”) as part of a combined contract which includes a standard two-month warranty term to ensure the quality of FreeAir and maintenance services for a ten-year period. The sale price for the combined contract is $5.4 million. If sold separately, the standalone selling price of the FreeAir would be $4.8 million and the standalone selling price of the ten-year maintenance service contract would be $1.35 million. The standard two-year warranty would not be offered without the FreeAir, so the standalone selling price is estimated to be zero.CAL purchased a patent on 1 January 2017 for $15 million from a world class scientist who has registered the patent on 1 January 1972. The legal right of the patent was set at 50 years from the date the patent was originally registered and the patent was…
19) Hopner Products enters into a contract with Tulles to sell three different products. The total transaction price is $370,000. Each of the products is a separate performance obligation. Based on the information presented in the table, what is the allocated transaction price of product Z using the expected-cost-plus-a-profit margin approach? (Round intermediary percentages to the nearest hundredth percent, and round your final answer to the nearest whole number.) Product X Y Z A) $159,390 B) $94,868 C) $123,333 D) $185,000 Standalone Price $150,000 $110,000 Not Available Market Price Forecasted Cost $130,000 $100,000 $160,000 $85,000 $100,000 $140,000
XYZ CO. delivered 150 portable gas stoves to DEF CO. on consignment. These stoves cost P2,700 each and could be sold for P4,500. The consignee is to be allowed a commission of 15% of the selling price. The agreement for the consignment contract stated that XYZ CO. would draw a sight draft on the consignee for 60% of the cost of the stoves and the advance shall be recovered periodically by monthly deductions (in proportion to units sold) from the remittances which accompany the account sales. All expenses of the consignee are to be deducted monthly as incurred. The consignee rendered an Account Sales at the end of the first month showing among others the following information: Advertising P6,750 Delivery expense P3,375 Commission P10,125 How much is the amount remitted by DEF to XYZ for the first month?
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Idris has been awarded a contract to supply a crude palm oil at a price RM1000 per metric ton. Deeva Mills Berhad, an established company will purchase this commodity as per agreed price. An agreement has been signed between Idris and Deeva Mills Berhad. Based on the situation above, please answer the following questions: a. Analyse the financing facilities that suits to the above situation. b. Discuss the responsibilities of the parties involved in this contract. c. Explain the benefit received by Idris if he enters into this contract. d. Discuss the consequences faced by Idris if he unable to deliver the commodity within the stipulated time.
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On December 15, 2001, star glass Co. entered into a 30-day forward contract to buy 10,000 yens at the forward rate of 1.50. 0n December 31, 2001, the forward rate was 1.25 and january 15,2002, the spot rate moved to 1.60. Provide the journal entries under each of the following scenarios: (a) the contract is settled by the actual purchase of yens; and (b) the contract is settled through net cash payment.
ABC Co. delivered 150 portable gas stoves to DEF Co. on consignment. These stoves cost P2,700 each and could be sold for P4,500. The consignee is to be allowed a commission of 15% of the selling price. The agreement for the consignment contract stated that ABC Co. would draw a sight draft on the consignee for 60% of the cost of the stoves and the advance shall be recovered periodically by monthly deductions (in proportion to units sold) from the remittances which accompany the account sales. All expenses of the consignee are to be deducted monthly as incurred. The consignee rendered an Account Sales at the end of the first month showing among others, the following Information: Advertising P6,750; Delivery Expense P3,375 and Commission P10,135. How much is the amount remitted by DEF to ABC for the first month?
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Euro Aviation signed a purchase commitment for jet fuel in Year 1 for in the amount of $10,000,000. The fuel is to be delivered in Year 2. At December 31, Year 1 the market value of the contract is $11.200,000 due to an increase in jet fuel prices. It is expected the gain will be realized in Year 2 as jet fuel is delivered. 1. Describe how Euro Aviation may account for this contract at the end of Year 1 under IFRS (Is there more than one option and specifically what are they)? 2. Describe how Euro Aviation may account for this contract at the end of Year 1 under US GAAP?

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