Jackson Corp. (a US-based company) sold parts to a Korean customer on December 16, 2021, with payment of 20 million Korean won to be received on January 15, 2022. The following exchange rates applied: Date December 16, 2021 December 31, 2021 January 15, 2022 Spot Rate $0.00082 0.00080 0.00086 Forward Rate to Jan. 15 $0.00089 0.00083 0.00086 Assuming a forward contract was entered into on December 16, how would the forward contract be reflected on Jackson's December 31, 2021 balance sheet?
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- Brandt Corp. (a U.S.-based company) sold parts to a South Korean customer on December 1, 2020, with payment of 10 million South Korean won to be received on March 31, 2021. The following exchange rates apply: Date Spot Rate Forward Rate(to March 31, 2021) December 1, 2020 $ 0.0035 $ 0.0034 December 31, 2020 0.0033 0.0032 March 31, 2021 0.0038 N/A 1. Assuming that Brandt did not hedge his foreign exchange risk, how much foreign exchange gain or loss should it report on its 2020 income statement with regard to this transaction? a. 3000 gain b. 2000 loss c. 5000 gain d. 1000 loss 2. Assuming that Brandt entered into a forward contract to sell 10 million South Korean won on December 1, 2020, as a fair value hedge of a foreign currency receivable, what is the net impact on its net income in 2020 resulting from a fluctuation in the value of the won? Brandt amortizes forward points on a monthly basis using a straight-line method. Ignore…3. XYZ Corp., U.S.-based company, bought parts from a South Korean supplier on December 1, 2020, with 40 million Korean won to be paid on January 31, 2021. The following exchange rates applied: For V Date Spot Rate $0.0092 368, $0.0090 (2000) January 31, 2021 $0.0095 Assuming a forward contract was entered into on December 1, 2020, what would be the net impact on XYZ's 2020 income statement related to this foreign currency transaction? Assume an annual interest rate of 12% and a fair value hedge. The present value for one month at 12% is .9901. Le A/P .0093. December 1, 2020 December 31, 2020 Forward Rate to 01/31/2021 $0.0098 $0.0093 N/A $19,802 increase in net income - $8,000 decrease in net income $8,000 increase in net income - $11,802 decrease in net income $11,802 increase in net income - $19,802 decrease in net income 00% 6 x 41 10 149 -80bb1-Accounting Car Corp. (a U.S.-based company) sold parts to a Japanese customer on December 1, 2020, with payment of 10 million Japanese yen to be received on January 31, 2021. The following exchange rates applied: Date Spot rate Forward rate to 01/31/21 0.00090 0.00093 0.00092 0.00098 0.00095 December 1, 2020 December 31, 2020 January 31, 2021 Assuming a forward contract was entered into, what would be the net impact on Car Corp.'s 2020 income statement related to this foreign currency transaction? Assume an annual interest rate of 12% and a fair value hedge. The present value for one month at 12% is .9901. A. $295.05 (loss). B. $ 300 (gain). C. $ 300 (loss). D. $ 700 (gain). E. $ 700 (loss). 0.00095
- MNC Corp. (a U.S.-based company) sold parts to a South Korean customer on December 1, 2017, with payment of 10 million South Korean won to be received on March 31, 2018. The following exchange rates apply: Date Spot Rate Forward rate ( to march 31, 2018 ) December 1, 2017 $0.0035 $0.0034 December 31, 2017 0.0033 0.0032 March 31, 2018 0.0038 N/A MNC’s incremental borrowing rate is 12 percent. The present value factor for three months at an annual interest rate of 12 percent (1 percent per month) is 0.9706. Assuming that MNC entered into a forward contract to sell 10 million South Korean won on December 1, 2017, as a fair value hedge of a foreign currency receivable, what is the net impact on its net income in 2017 resulting from a fluctuation in the value of the won? Choose the correct.a. No impact on net income.b. $58.80 decrease in net income.c. $2,000 decrease in net income.d. $1,941.20 increase in net income.MNC Corp. (a U.S.-based company) sold parts to a South Korean customer on December 1, 2017, with payment of 10 million South Korean won to be received on March 31, 2018. The following exchange rates apply: Date Spot Rate Forward rate ( to march 31, 2018 ) December 1, 2017 $0.0035 $0.0034 December 31, 2017 0.0033 0.0032 March 31, 2018 0.0038 N/A MNC’s incremental borrowing rate is 12 percent. The present value factor for three months at an annual interest rate of 12 percent (1 percent per month) is 0.9706. Assuming that MNC did not enter into a forward contract, how much foreign exchange gain or loss should it report on its 2017 income statement with regard to this transaction? Choose the correct.a. $5,000 gainb. $3,000 gainc. $2,000 lossd. $1,000 loss1- Jackson Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2021, with payment of 20 million Korean won to be received on January 15, 2022. The following exchange rates applied: DateSpot RateForward Rate to Jan.15December 16, 2021$0.00082 $0.00089 December 31, 2021 0.00080 0.00083 January 15, 2022 0.00086 0.00086 Assuming a forward contract was not entered into, what would be the net impact on Jackson Corp.'s 2021 income statement related to this transaction? Multiple Choice $600 (gain). $600 (loss). $400 (gain). $400 (loss). $0
- 1- Jackson Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2021, with payment of 20 million Korean won to be received on January 15, 2022. The following exchange rates applied: DateSpot RateForward Rate to Jan.15December 16, 2021$0.00082 $0.00089 December 31, 2021 0.00080 0.00083 January 15, 2022 0.00086 0.00086 Assuming a forward contract was not entered into, what would be the net impact on Jackson Corp's 2021 income statement related to this transaction? Multiple Choice . $600 (gain). ⚫ $600 (loss). ⚫ $400 (gain). ⚫ $400 (loss). . So 2- Jackson Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2021, with payment of 20 million Korean won to be received on January 15, 2022. The following exchange rates applied: DateSpot RateForward Rate to Jan.15December 16, 2021$0.00082 $0.00089 December 31, 2021 0.00080 0.00083 January 15, 2022 0.00086 0.00086 Assuming a forward contract was entered into on December 16 as a fair value hedge,…cebreaker Company (a U.S.-based company) purchases materials from a foreign supplier on December 1, 2020, with payment of 18,000 dinars to be made on March 1, 2021. The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December 1, 2020, Icebreaker enters into a forward contract to purchase 18,000 dinars on March 1, 2021. Relevant exchange rates for the dinar on various dates are as follows: Date Spot Rate Forward Rate(to March 1, 2021) December 1, 2020 $ 3.60 $ 3.675 December 31, 2020 3.70 3.800 March 1, 2021 3.85 N/A a-1. Assuming that Icebreaker designates the forward contract as a cash flow hedge of a foreign currency payable, prepare journal entries for the import purchase and foreign currency forward contract in U.S. dollars. a-2. What is the impact on 2020 net income? a-3. What is the impact on 2021 net income? a-4. What is the impact on net income over the two accounting periods?…cebreaker Company (a U.S.-based company) purchases materials from a foreign supplier on December 1, 2020, with payment of 12,000 dinars to be made on March 1, 2021. The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December 1, 2020, Icebreaker enters into a forward contract to purchase 12,000 dinars on March 1, 2021. Relevant exchange rates for the dinar on various dates are as follows: Date Spot Rate Forward Rate(to March 1, 2021) December 1, 2020 $ 3.00 $ 3.075 December 31, 2020 3.10 3.200 March 1, 2021 3.25 N/A a-1. Assuming that Icebreaker designates the forward contract as a cash flow hedge of a foreign currency payable, prepare journal entries for the import purchase and foreign currency forward contract in U.S. dollars. Record the purchase of materials. 2 Record the forward contract. 3 Record the entry to revalue the foreign currency account payable. 4 Record the change in…
- Icebreaker Company (a U.S.-based company) purchases materials from a foreign supplier on December 1, 2020, with payment of 19,000 dinars to be made on March 1, 2021. The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December 1, 2020, Icebreaker enters into a forward contract to purchase 19,000 dinars on March 1, 2021. Relevant exchange rates for the dinar on various dates are as follows: Date Spot Rate Forward Rate(to March 1, 2021) December 1, 2020 $ 3.70 $ 3.775 December 31, 2020 3.80 3.900 March 1, 2021 3.95 N/A b-1. Assuming that Icebreaker designates the forward contract as a fair value hedge of a foreign currency payable, prepare journal entries for the import purchase and foreign currency forward contract in U.S. dollars. Record the purchase of materials. Record the forward contract. Record the entry to revalue the foreign currency account payable. Record the foreign exchange…Icebreaker Company (a U.S.-based company) purchases materials from a foreign supplier on December 1, 2020, with payment of 19,000 dinars to be made on March 1, 2021. The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December 1, 2020, Icebreaker enters into a forward contract to purchase 19,000 dinars on March 1, 2021. Relevant exchange rates for the dinar on various dates are as follows: Date Spot Rate Forward Rate(to March 1, 2021) December 1, 2020 $ 3.70 $ 3.775 December 31, 2020 3.80 3.900 March 1, 2021 3.95 N/A a-1. Assuming that Icebreaker designates the forward contract as a cash flow hedge of a foreign currency payable, prepare journal entries for the import purchase and foreign currency forward contract in U.S. dollars. Record the purchase of materials. Record the forward contract. Record the entry to revalue the foreign currency account payable. Record the change in the fair…cebreaker Company (a U.S.-based company) purchases materials from a foreign supplier on December 1, 2020, with payment of 23,000 dinars to be made on March 1, 2021. The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December 1, 2020, Icebreaker enters into a forward contract to purchase 23,000 dinars on March 1, 2021. Relevant exchange rates for the dinar on various dates are as follows: Date Spot Rate Forward Rate(to March 1, 2021) December 1, 2020 $ 4.10 $ 4.175 December 31, 2020 4.20 4.300 March 1, 2021 4.35 N/A b-1. Assuming that Icebreaker designates the forward contract as a fair value hedge of a foreign currency payable, prepare journal entries for the import purchase and foreign currency forward contract in U.S. dollars. b-2. What is the impact on net income in 2020 and in 2021? b-3. What is the impact on net income over the two accounting periods?
