Question
(e) Rambutan Bhd enters into a forward contract to purchase 800,000 ordinary shares of Durian Bhd in six months. The current market price of Durian
(e) Rambutan Bhd enters into a forward contract to purchase 800,000 ordinary shares of Durian Bhd in six months. The current market price of Durian Bhd is RM26 per share; the 6-month forward price of Durian Bhd is RM30 per share. Rambutan Bhd is required to prepay the forward contract at inception with a payment of RM20.8 million.
Required: Explain whether Rambutan Bhd should account for the forward contract as a derivative.
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Cost Accounting With Integrated Data Analytics
Authors: Karen Congo Farmer, Amy Fredin
1st Edition
1119731860, 9781119731863
