Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Canada Corp. sells raw lumber to a number of countries around the world. On December 1, 2016 the company shipped some lumber to a client

Canada Corp. sells raw lumber to a number of countries around the world. On December 1, 2016 the company shipped some lumber to a client in Japan. The selling price was established at 500,000 Yen with payment to be received on March 1, 2017.

On December 3, 2016 the company entered into a hedge with a Canadian Bank at the 90 day forward rate of 1 Yen = CDN$1.185. The forward contract was designated as a fair value hedge of the receivable from the Japanese customer.

Canada Corp received the payment from its Japanese client on March 1, 2017. Canada Corp's year end is on December 31.

Selected spot rates were as follows:

December 1, 2016:

1 Yen = CDN$1.155

December 3, 2016:

1 Yen = CDN$1.155

December 31, 2016:

1 Yen = CDN$1.1625

March 1, 2017:

1 Yen = CDN$1.1750

The two-month forward rate on December 31, 2016 was 1Yen = CDN$1.1800.

  1. Prepare any and all journal entries arising from this transaction.image text in transcribed

  2. Prepare the journal entries to record the receipt of the 500,000 Yen on March 1, 2017, assuming that Canada Corp did not enter into a hedge transaction in December 2016.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

=+ (a) Show that C is uncountable but trifling.

Answered: 1 week ago

Question

Task 1.: Draw flow chart of LIFO. (in the context of SAN)

Answered: 1 week ago

Question

mple 10. Determine d dx S 0 t dt.

Answered: 1 week ago