Wayne Limited purchased a capital asset from France for 500,000. The asset was delivered to Wayne Limited
Question:
Wayne Limited purchased a capital asset from France for €500,000. The asset was delivered to Wayne Limited on November 1, 2005. Wayne Limited agreed to pay the supplier in full on February 1, 2006. The payment was made as agreed.
The exchange rates were as follows:
Required:
a. Prepare journal entries for 2005 and 2006 to record the above information.
b. Assume that Wayne Limited hedged the obligation on November 1, 2005.
The forward rate was C$1.00 = €0.64. Prepare the appropriate journal entries for 2005 and 2006.
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Step by Step Answer:
To answer parts a and b of your question well first need to calculate the equivalent Canadian Dollar C amounts based on the exchange rates provided on the respective dates and then prepare the require...View the full answer
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