On October 1, Year 1, Butterworth Company entered into a forward contract to sell 100,000 rupees in
Question:
On October 1, Year 1, Butterworth Company entered into a forward contract to sell 100,000 rupees in four months (on January 31, Year 2). Relevant exchange rates for the rupee are as follows:
Required:
a. Prepare journal entries assuming the forward contract was entered into as a fair value hedge of a 100,000-rupee receivable arising from a sale made on October 1, Year 1. Include entries for both the sale and the forward contract.
b. Prepare journal entries assuming the forward contract was entered into as a fair value hedge of a firm commitment related to a 100,000-rupee sale that will be made on January 31, Year 2. Include entries for both the firm commitment and the forward contract. The fair value of the firm commitment is measured through reference to changes in the forward rate.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Question Posted: