Complete the Topic 6 DQ1 component in Connect. What are the steps to determine the impact on the net income in the specific quarters noted? How do those steps differ when calculating annual net income? How do you determine the impact on cashflows? Share a post explaining your key learning from those problems. What areas were unfamiliar and how did you strengthen your knowledge of these concepts? Share your interpretation of the concepts.
Required information [The following information applies to the questions displayed below.] On June 1, 2020, Munchkin Corp, received an order for finished goods from a Turkish customer at a price of 500,000 Turkish lira with a delivery date of July 31,2020 . On June 1, when the U.S. dollar-Turkish lira spot rate is $0.230, Munchkin Corp. entered into a two-month forward contract to sell 500,000 lira at a forward rate of $0.240 per lira. Munchkin designates the forward contract as a fair value hedge of the firm commitment to receive lira. The fair value of the firm commitment is measured by referring to changes in the lira forward rate, so forward points must be included in assessing hedge effectiveness of the forward contract. Munchkin delivers the goods and receives payment on July 31, 2020, when the U.S. dollar-Turkish lira spot rate is $0.236. On June 30,2020 , the Turkish lira spot rate is $0.246, and the forward contract has a fair value of $2,400. hat is the net impact on Munchkin's net income for the quarter ended September 30, 2020, as a result of this forward contract hed Multiple Choice $0 $120,000 incresse in net income $115,000 increase in net income $118,000 increase in net income Required information [The following information applies to the questions displayed below.] On June 1, 2020, Munchkin Corp. received an order for finished goods from a Turkish customer at a price of 500,000 Turkish lira with a delivery date of July 31,2020 . On June 1, when the U.S. dollar-Turkish lira spot rate is $0.230, Munchkin Corp. entered into a two-month forward contract to sell 500,000 lira at a forward rate of $0.240 per lira. Munchkin designates the forward contract as a fair value hedge of the firm commitment to receive lira. The fair value of the firm commitment is measured by referring to changes in the lira forward rate, so forward points must be included in assessing hedge effectiveness of the forward contract. Munchkin delivers the goods and receives payment on July 31,2020 , when the U.S. dollar-Turkish lira spot rate is $0.236. On June 30,2020 , the Turkish lira spot rate is $0.246, and the forward contract has a fair value of $2,400. What is Munchkin's net increase or decrease in cash flow from having entered into this forward contract hedge? Multiple Choice $0 $1,000 increase in cash flow $1,500 decrease in cash flow $2,000 increase in cash flow Required information [The following information applies to the questions displayed below] On June 1, 2020, Munchkin Corp. received an order for finished goods from o Turkish customer at a price of 500,000 Turkish lira with a delivery date of July 31,2020 . On June 1, when the U.S. dollar-Turkish lira spot rate is $0.230, Munchkin Corp. entered into a two-month forward contract to sell 500,000 lira at a forward rate of $0.240 per lira. Munchkin designates the forward contract as a fair value hedge of the firm commitment to receive lira. The fair value of the firm commitment is measured by referring to changes in the lira forward rate, so forward points must be included in assessing hedge effectiveness of the forward contract. Munchkin delivers the goods and receives payment on July 31,2020 , when the U.S. dollar-Turkish lira spot rate is $0.236. On June 30,2020 , the Turkish lira spot rate is $0.246, and the forward contract has a fair value of $2,400. Multsple Choice $4,000 decrease in net income $2,400 increase in net income $8,000 increase in net income $0
