Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

CPA skills On February 1, 2020, when the spot rate was $1.00 per Swiss franc, Blue Bogey Company (BBC) forecasted the purchase of component parts

image text in transcribed

CPA skills On February 1, 2020, when the spot rate was $1.00 per Swiss franc, Blue Bogey Company (BBC) forecasted the purchase of component parts on May 1, 2020, at a price of 100,000 Swiss francs. On that date, BBC entered into a forward contract to purchase 100,000 Swiss francs on May 1, 2020, and designated the forward contract as a cash flow hedge of the forecasted transaction. The forward points are excluded from the assessment of hedge effectiveness and are straight-line amortized on a monthly basis. On May 1, 2020, the forward contract was settled, and the component parts were received and paid for. The parts were used in the assembly of finished goods that were sold by June 30, 2020. BBC's trial balance at March 31 (end of the first quarter) reported the following amounts related to this cash flow hedge (credit balance in parentheses): Trial Balance Forward contract (asset) Cost of goods sold Other comprehensive income (OCI) Total March 31, 2020 $ 2.000 6,000 (8,000) $ -0- Required Answer the following questions: 1. On February 1, 2020, was the Swiss franc selling at a discount or at a premium in the three-month forward market? 2. On February 1, 2020, what was the U.S. dollar per Swiss franc forward rate to May 1, 2020? 3. On March 31, 2020, what was the U.S. dollar per Swiss franc forward rate to May 1, 2020? 4. What amount did BBC recognize as Cost of Goods Sold in the second quarter of 2020

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

Step: 3

blur-text-image

Ace Your Homework with AI

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

Get Started

Students also viewed these Accounting questions

Question

3. Identify the refusal of the call in Star Wars.

Answered: 1 week ago

Question

What are the objectives of Human resource planning ?

Answered: 1 week ago

Question

Explain the process of Human Resource Planning.

Answered: 1 week ago