{ "key_pair_value_system": true, "answer_rating_count": "", "question_feedback_html": { "html_star": "", "html_star_feedback": "" }, "answer_average_rating_value": "", "answer_date_js": "2024-09-13T03:04:40-04:00", "answer_date": "2024-09-13 03:04:40", "is_docs_available": "", "is_excel_available": "", "is_pdf_available": "", "count_file_available": 0, "main_page": "student_question_view", "question_id": "10561461", "url": "\/study-help\/questions\/based-on-past-experience-maas-corp-a-u-10561461", "question_creation_date_js": "2024-09-13T03:04:40-04:00", "question_creation_date": "Sep 13, 2024 03:04 AM", "meta_title": "[Solved] Based on past experience, Maas Corp. ( a | SolutionInn", "meta_description": "Answer of - Based on past experience, Maas Corp. ( a U . S . - based company ) expects to purchase raw materials from a foreign su | SolutionInn", "meta_keywords": "based,experience,maas,corp,s,-,company,expects,purchase,raw,materials,foreign", "question_title_h1": "Based on past experience, Maas Corp. ( a U . S . - based company ) expects to purchase raw materials from a foreign supplier", "question_title": "Based on past experience, Maas Corp. ( a U . S .", "question_title_for_js_snippet": "Based on past experience, Maas Corp ( a U S based company ) expects to purchase raw materials from a foreign supplier at a cost of 1 , 0 0 0 , 0 0 0 francs on March 1 5 , 2 0 2 1 To hedge this forecasted transaction, on December 1 5 , 2 0 2 0 , the company acquires a call option to purchase 1 , 0 0 0 , 0 0 0 francs in three months Maas selects a strike price of $ 0 5 9 per franc when the spot rate is $ 0 5 9 and pays a premium of $ 0 0 0 1 per franc The spot rate increases to $ 0 5 9 8 at December 3 1 , 2 0 2 0 , causing the fair value of the option to increase to $ 8 , 5 0 0 By March 1 5 , 2 0 2 1 , when the raw materials are purchased, the spot rate has climbed to $ 0 6 0 , resulting in a fair value for the option of $ 1 0 , 0 0 0 The raw materials are used in assembling finished products, which are sold by December 3 1 , 2 0 2 1 , when Maas prepares its annual financial statements Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials What is the overall impact on net income over the two accounting periods What is the net cash outflow to acquire the raw materials ", "question_description": "
Based on past experience, Maas Corp. <\/span>(<\/mi><\/mrow><\/math>a U<\/span>.<\/mo><\/mrow><\/math>S<\/span>.<\/mo>-<\/mo><\/mrow><\/math>based company<\/span>)<\/mi><\/mrow><\/math> expects to purchase raw materials from a foreign supplier at a cost of <\/span>1<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn><\/mrow><\/math> francs on March <\/span>1<\/mn>5<\/mn>,<\/mo><\/mtext>2<\/mn>0<\/mn>2<\/mn>1<\/mn>.<\/mo><\/mrow><\/math> To hedge this forecasted transaction, on December <\/span>1<\/mn>5<\/mn>,<\/mo><\/mtext>2<\/mn>0<\/mn>2<\/mn>0<\/mn>,<\/mo><\/mrow><\/math> the company acquires a call option to purchase <\/span>1<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn><\/mrow><\/math> francs in three months. Maas selects a strike price of $<\/span>0<\/mn>.<\/mn>5<\/mn>9<\/mn><\/mrow><\/math> per franc when the spot rate is $<\/span>0<\/mn>.<\/mn>5<\/mn>9<\/mn><\/mrow><\/math> and pays a premium of $<\/span>0<\/mn>.<\/mn>0<\/mn>0<\/mn>1<\/mn><\/mrow><\/math> per franc. The spot rate increases to $<\/span>0<\/mn>.<\/mn>5<\/mn>9<\/mn>8<\/mn><\/mrow><\/math> at December <\/span>3<\/mn>1<\/mn>,<\/mo><\/mtext>2<\/mn>0<\/mn>2<\/mn>0<\/mn>,<\/mo><\/mrow><\/math> causing the fair value of the option to increase to $<\/span>8<\/mn>,<\/mo>5<\/mn>0<\/mn>0<\/mn>.<\/mo><\/mrow><\/math> By March <\/span>1<\/mn>5<\/mn>,<\/mo><\/mtext>2<\/mn>0<\/mn>2<\/mn>1<\/mn>,<\/mo><\/mrow><\/math> when the raw materials are purchased, the spot rate has climbed to $<\/span>0<\/mn>.<\/mn>6<\/mn>0<\/mn>,<\/mo><\/mrow><\/math> resulting in a fair value for the option of $<\/span>1<\/mn>0<\/mn>,<\/mo>0<\/mn>0<\/mn>0<\/mn>.<\/mo><\/mrow><\/math> The raw materials are used in assembling finished products, which are sold by December <\/span>3<\/mn>1<\/mn>,<\/mo><\/mtext>2<\/mn>0<\/mn>2<\/mn>1<\/mn>,<\/mo><\/mrow><\/math> when Maas prepares its annual financial statements.<\/span> <\/div>
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Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials.<\/span><\/div>
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What is the overall impact on net income over the two accounting periods?<\/span><\/div>
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What is the net cash outflow to acquire the raw materials?<\/span><\/div><\/span> <\/div><\/div>", "transcribed_text": "", "related_book": { "title": "Financial Accounting An Integrated Statements Approach", "isbn": "324312113, 978-0324312119", "edition": "2nd Edition", "authors": "Jonathan E. Duchac, James M. Reeve, Carl S. Warren", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/126.jpg", "uri": "\/textbooks\/financial-accounting-an-integrated-statements-approach-2nd-edition-126", "see_more_uri": "" }, "free_related_book": { "isbn": "", "uri": "", "name": "", "edition": "" }, "question_posted": "2024-09-13 03:04:40", "see_more_questions_link": "\/study-help\/questions\/business-marketing-2022-June-08", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/study-help\/business-communication\/40-compare-and-contrast-ipsec-tunnel-mode-and-ipsec-transfer-2005594", "description": "40. Compare and contrast IPSec tunnel mode and IPSec transfer mode.", "stars": 0 }, { "url": "\/for-a-recent-year-officemax-and-staples-are-two-companies", "description": "For a recent year, OfficeMax and Staples are two companies competing in the retail office supply business. OfficeMax had a net income of $71,155,000, while Staples had a net income of $881,948,000....", "stars": 3 }, { "url": "\/study-help\/questions\/based-on-past-experience-maas-corp-a-u-10561461", "description": "Based on past experience, Maas Corp. ( a U . S . - based company ) expects to purchase raw materials from a foreign supplier at a cost of 1 , 0 0 0 , 0 0 0 francs on March 1 5 , 2 0 2 1 . To hedge...", "stars": 3 }, { "url": "\/study-help\/questions\/the-budget-director-of-heathers-florist-has-prepared-the-following-5897404", "description": "The budget director of Heathers Florist has prepared the following sales budget. The company had $134,600 in accounts receivable on July 1. Heathers Florist normally collects 100 percent of accounts...", "stars": 3 }, { "url": "\/study-help\/questions\/channa-was-asked-to-write-an-expression-equivalent-to-i-2110427", "description": "Channa was asked to write an expression equivalent to i(2 + 3i) (4i - 1) in the form a+bi. Here is her work: Channa's Work First, I simplified i(2 + 3i) 3i i2i 3i Then, I simplified (2i+ 3i) (4i - 1)...", "stars": 3 }, { "url": "\/study-help\/questions\/pravalt-construction-company-pcc-is-insured-under-a-standard-commercial-2108854", "description": "Pravalt Construction Company (PCC) is insured under a standard commercial general liability (CGL) policy with a $1 million each occurrence limit and a $2 million general aggregate limit. The CGL...", "stars": 3 }, { "url": "\/study-help\/questions\/help-please-i-need-all-answers-please-type-it-correctly-2114091", "description": "ed Exercise 10-1 (Algo) Acquisition costs; land and building [LO10-1] On March 1, 2021, Beldon Corporation purchased land as a factory site for $80,000. An old building on the property was...", "stars": 3 }, { "url": "\/study-help\/questions\/15-the-local-recreation-center-has-asked-you-to-design-2014649", "description": "15. The local recreation center has asked you to design a machine that launches a hopper full of basketballs at a hoop so the team can practice rebounding drills. The machine needs to adjust to...", "stars": 3 }, { "url": "\/study-help\/questions\/geometry-2-aabc-is-acuteangled-a-explain-why-there-is-2016968", "description": "Geometry 2. AABC is acute-angled. (a) Explain why there is a square PQRS with P on AB, Q and R on BC, and S on AC. (The intention here is that you explain in words why such a square must exist rather...", "stars": 3 } ], "next_back_navigation": { "previous": "\/study-help\/questions\/derrick-iverson-is-a-divisional-manager-for-holston-company-his-10561460", "next": "\/study-help\/questions\/compute-the-cost-of-goods-sold-for-the-month-using-10561462" }, "breadcrumbs": [ { "name": "Study help", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers" }, { "name": "Business", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers\/business" }, { "name": "Accounting", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/business-accounting" }, { "name": "Based on past experience, Maas Corp. ( a U . S .", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/based-on-past-experience-maas-corp-a-u-10561461" } ], "skill_details": { "skill_id": "9", "skill_name": "Accounting", "parent_id": "1" } }d": "1" } }