Question
1) On November 1 of the current year, Dover Corp. decides to buy a machine from a European supplier for 200,000 euros in six months.
1) On November 1 of the current year, Dover Corp. decides to buy a machine from a European supplier for 200,000 euros in six months. At the time of the decision, the six-month forward exchange rate is 1.30, resulting in a budget of $260,000 for the purchase. Dover enters a forward contract to purchase 200,000 euros at 1.30 as a cash flow hedge to protect against changes in the exchange rate. When Dover prepares its year-end financial statements, the unrealized gains and losses in the fair value of the forward contract will be recognized
A.
In current earnings.
B.
In other comprehensive income.
C.
As an adjustment to the payable.
D.
As an adjustment to the equipment asset.
2) A company reports the following information as of December 31, Year 5:
Sales revenue | $350,000 |
Cost of goods sold | 150,000 |
Operating expenses | 110,000 |
Foreign currency translation gain | 25,000 |
Gain on sale of equipment | 35,000 |
Proceeds from issuance of common stock | 20,000 |
Ignoring income taxes, what amount should the company report as comprehensive income as of December 31, year 5?
A.
$115,000
B.
$125,000
C.
$150,000
D.
$170,000
3) When preparing interim financial reports, a company's income tax expense for the second quarter is calculated using the company's
Statutory tax rate | Cumulative taxable income |
A.
Yes | Yes |
B.
Yes | No |
C.
No | Yes |
D.
No | No |
4) Disclosure is required by publicly held companies if 10% or more of total revenues are derived from
Sales to a single customer | Export sales |
A.
Yes | Yes |
B.
Yes | No |
C.
No | Yes |
D.
No | No |
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