1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Art [367]
3 years ago
5

A company is doing business with a German entity and, as a result, has entered into a forward exchange contract on December 18,

year 2, under which it will purchase 300,000 Euros on February 18, year 3. Relevant exchange rates are as follows: Spot rate Forward rate for 2/18, year 3 November 18, year 2 $1.27 $1.30 December 18, year 2 1.32 1.25 December 31, year 2 1.35 1.31 February 18, year 3 1.37 The company purchased printing supplies from a German supplier on November 18, year 2, on 90 day terms, and is required to pay 300,000 Euros on February 18, year 3. When the exchange rate increased on December 18, the company decided to enter into the forward exchange contract, which was not designated as a hedge. What amount of foreign currency gain or loss should be recognized in income on December 31, year 2
Business
1 answer:
elena-14-01-66 [18.8K]3 years ago
6 0

Answer:

$18,000 gain

Explanation:

Calculation for the amount of foreign currency gain or loss that should be recognized in income on December 31, year 2

Since Forward rate was given as:

December 18, year 2 $1.25

December 31, year 2 $1.31

Which means we have to Deduct the forward rate of December 18, year 2 which is $1.25 from the forward rate of December 31, year 2 which is $1.31 and then multiply it by the amount in which forward rate was purchased which is 300,000 Euro which will in turn give us the amount of foreign currency gain that should be recognized in income on December 31, year 2

Now let calculate

Forward rate December 18, year 2 $1.25

Less Forward rate December 31, year 2 $1.31

=$0.06 gain per Euro

Now let calculate for the amount of foreign currency gain that should be recognized in income on December 31, year 2

Hence,

Forward rate purchased amount 300,000 Euro ×$0.06 gain per Euro

=$18,000 gain

Therefore the amount of foreign currency gain that should be recognized in income on December 31, year 2 will be $18,000 gain.

You might be interested in
The demand and supply functions for basic cable TV in the local market are given as: Calculate the consumer and producer surplus
lana [24]

Answer: Hello your question is poorly written attached below is the complete question

answer:

a) Cs = 800,000 ,  Ps = 1,500,000

b) Cs = 1437500,  Ps = 525,000

Explanation:

Demand function ( Qd ) = 200,000 - 4000 P

supply function ( Qs ) = 20,000 + 2000 P

at equilibrium :  200,000 - 4000P = 20,000 + 2000P

therefore ; P = 180,000 / 6000 = 30

Q = 20,000 + 2000 ( 30 ) = 80,000

<u>a) Determine consumer and producer surplus in the market</u>

consumer surplus ( Cs ) This is the area above the price and below the demand curve  = 1/2 * ( 50 - 30 ) 80,000 = 800,000

producer surplus ( Ps ) This is the area above supply and below price

= 30 * ( 80,000 ) -  1/2 (80,000 - 20,000 ) (30)

= 1,500,000

<u>b) Determine the new levels of consumer and producer surplus with a price ceiling of $15 </u>

Pc (ceiling price ) = $15

Qd = 200,000 - 4000 ( 15 )  = 140,000

Qs = 20,000 + 2000 ( 15 ) = 50,000

∴ New consumer surplus = area ( a , Pc, b, d )

= ( 30 - 15 ) (50,000) + 1/2(50-30) (80,000) - 1/2 (80,000 - 50,000 ) (37.5 - 30)

   = 1437500

New producer surplus = area ( Pc , b, e 0 )

= ( 15 ) ( 50000) - 1/2 ( 50,000 - 20,000 ) (15)

= 525,000

7 0
3 years ago
Valuetronics, an electronics company, is currently in the preproduction stage of launching one of its new stereo systems. In ord
Katyanochek1 [597]

Answer: Computer aided engineering(CAE) systems.

Explanation:

Computer aided engineering involves making use of computer softwares that aids production. The computer aided engineering software is used to design how product could look like, simulate the product on a computer system to determine the product's possible performance and to ensure the desired standard is met, before the design can then be used to carry out production. Computer aided engineering is commonly applied in automobile production and large buildings construction.

4 0
3 years ago
a car travaling at a speed of 24 m/s comes to a stop at a red light how much time will it take for the car to stop if it's excel
RideAnS [48]
Answer: The answer is 3 seconds

Explanation: because 24 divided by 3 is 8. Eight must be subtracted 3 times from 24 in order to reach 0.
6 0
3 years ago
I'maGoldMiner has benefited from a record rise in gold prices in the global commodities market. While the price of its output is
neonofarm [45]

Answer:

a) must accept market price for its physical capital inputs.

Explanation:

The price of gold in the commodity market is being influenced by market speculation.  Market speculation implies investors are trying to profit from the changing prices of gold.  When the market is active, the price of gold will be moving up and down depending on demand.

The current prices are high is a motivation to sell. For I'maGoldMiner to profit from the current high prices, it must continue with production. In the event the prices of physical capital inputs change, the company must accept the new prices.  The high selling prices will assist the company in absorbing any changes input costs. That way, the company will maximize on the current high prices.

3 0
3 years ago
Huprey Co. is the defendant in the following legal claims. For each of the following separate claims, indicate whether Huprey sh
Triss [41]

1. (a) Record a liability

2. (a) Record a liability

3. (b) Disclose in notes

<h3>What happens if you fail to record a liability?</h3>

Frequently, failing to register a responsibility entails also neglecting to record an expense. Income is decreased by expenses; but, in this case, this wasn't documented so that net income wouldn't be impacted when it should have been. The net income will be overstated as a result.

<h3>On a balance sheet, how do you record liabilities?</h3>

Unearned income or a "payables" account is normally where liabilities are recorded. In most cases, unless they are regarded as contra liabilities, they have a credit balance. As a result of discounting or lowering the amount owed, this kind of liability has a negative balance.

To know more about record a liability visit:

brainly.com/question/14266222

#SPJ4

4 0
1 year ago
Other questions:
  • Exercise 2-15 Computing net income LO A1 A corporation had the following assets and liabilities at the beginning and end of this
    7·1 answer
  • The balance of Tori's average balance checking account
    9·1 answer
  • Following up on bad news in writing is important to _________. a. promote good relations b. formally confirm follow-up procedure
    15·1 answer
  • Michael dell warned companies to be careful about the way they interpret data from the​ ________. the sales numbers might reflec
    14·1 answer
  • Division of labor refers to:
    6·1 answer
  • Stephen is a hairdresser who gives haircuts to two customers in the same day. The haircut he gives to the first customer is not
    15·1 answer
  • . Which part of the online job application was easiest for you to complete? Which section was the most difficult? Give at least
    13·1 answer
  • Companies employing total quality management (TQM) programs know that Multiple Choice quality control should be incorporated onl
    8·1 answer
  • Which form of feasibility incorporates both physical and mental integration of the design work system during job completion
    14·1 answer
  • During some year a country had exports of $50 billion, imports of $70 billion, and domestic investment of $100 billion. what was
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!