Amazing corporation, a US enterprise sold product to a customer in Wales on October 1, 20x1 for 100,000 with payment required on April 1, 20x2

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Amazing Corporation, a U.S. enterprise, sold product to a customer in Wales on October 1, 20x for 100,000 with payment required on April 1, 20xl. Relevant exchange rates are: October 1, 20x1 December 31, 20x1 April 1, 20x2 Spot rate $1.87 $1.85 $1.90 $1.85 $1.84 The discount factor .95 corresponding to the company's incremental borrowing rate for 6 monthsis 6. Assuming that Amazing Corporation does not hedge this transaction, what is the amount of exchange gain or loss that it should show on its December 31, 20xl income statement? A) Loss $1,000 Loss $2,000 C) Gain $1,000 D) Gain $1,900 Assume that Amazing Corporation enters a forward contract on October 1, 20x1 to sell 100,000 six months hence, on April 1, 20x2. How should Amazing Corporation report the forward contract on its December 31, 20x1 financial statements? A) Asset $1,950 B) Liability $1,950 C) Asset $1,000 7. -D) Asset $950 What term is used to describe the circumstances under which Amazing Corporation is entering the forward contract? A) hedge of an unrecognized foreign currency firm commitment B) hedge of a recognized foreign-currency-denominated asset C) hedge of a forecast foreign-currency-denominated transaction D) hedge of net investment in foreign operations 8