h On December 1, 20X1, Micro World Incorporated entered into a 120-day forward contract to purchase 170,000 Australian dollars (A$). Micro World's fiscal year ends on December31. The direct exchange rates follow:DateDecember 1, 20X1December 31, 20X1January 30, 20X2March 31, 20X2Spot Rate$0.600$0.610$0.608$0.602Forward Rate(to March 31, 20X2)$0.609$0.612$0.605The forward contract was to hedge an anticipated purchase of furniture on January 30. The purchase took place on January 30 with payment due on March 31, 20X2. Thederivative is designated as a cash flow hedge. The company uses the forward exchange rate to measure hedge effectiveness. Which of the following is true of the journal entryrecorded to adjust the foreign currency receivable on December 31, 20X1 on Micro World's books?Debit Other Comprehensive Income for $1,190.O Debit Foreign Currency Receivable from Exchange Broker (A$) for $510.O Debit Foreign Currency Transaction Gain for $510.O Credit Foreign Currency Transaction Gain for $510.

The rate at which one country’s currency can be converted into another country’s currency referred…

On December 1, 20X1, Micro World Incorporated entered into a 120-day forward contract to purchase 170,000 Australian dollars (A$). Micro World's fiscal year ends on December 31. The direct exchange rates follow:

On December 1, 20X1, Micro World Incorporated entered into a 120-day forward contract to purchase 170,000 Australian dollars (A$). Micro World's fiscal year ends on December 31. The direct exchange rates follow:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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