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Please Correct solution with Explanation and Do not Give solution in image format

Please Correct solution with Explanation and Do not Give solution in image format

FINANCIAL ACCOUNTING
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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Please Correct solution with Explanation and Do not Give solution in image format
Required information AUS-based company sold parts to a Foreign customer on December 16, 2018, with payment of 10 million FC (foreign currency unit) to be received on January 15, 2019. The following exchange rates applied Date December 16, 2018 December 31, 2018 January 15, 2019. Spot Rate $ 0.00092 0.00090 0.00095 Forward Rate to Jan.15 $ 0.00098 0.00093 0.00095 Assuming a forward contract was entered into on the day of December 16, and the U.S. company designated this hedging as cash flow hedge. During this 31-day transaction, December 31 was the Balance Sheet reporting day. How would this transaction affect US company's 2018 Income Statement (excluding the effect of sales? (Round to the closest dollar, if needed).
Transcribed Image Text:Required information AUS-based company sold parts to a Foreign customer on December 16, 2018, with payment of 10 million FC (foreign currency unit) to be received on January 15, 2019. The following exchange rates applied Date December 16, 2018 December 31, 2018 January 15, 2019. Spot Rate $ 0.00092 0.00090 0.00095 Forward Rate to Jan.15 $ 0.00098 0.00093 0.00095 Assuming a forward contract was entered into on the day of December 16, and the U.S. company designated this hedging as cash flow hedge. During this 31-day transaction, December 31 was the Balance Sheet reporting day. How would this transaction affect US company's 2018 Income Statement (excluding the effect of sales? (Round to the closest dollar, if needed).
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