Question
Car Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2011, with payment of 10 million Korean won to be received
Car Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2011, with payment of 10 million Korean won to be received on January 15, 2012. The following exchange rates applied: Date : December 16th, 2011 Spot Rate : $0.00092 Forward Rate to January 15th : $0.00098
Date : December 31st, 2011 Spot Rate : $0.00090 Forward Rate to January 15th : $0.00093
Date : January 15th, 2012 : Spot Rate : $0.00095 Forward Rate to January 15th : $0.00095
Question :
. Assuming a forward contract was entered into on December 16, what would be the net impact on Car Corp.'s 2012 income statement related to this transaction? A. $500 (gain). B. $305 (gain). C. $300 (gain). D. $300 (loss). E. $0.
I need detailed help with steps as to why answer was B) and detailed calculations.
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