Fair Value Hedge: Short in Commodity Futures Amenisan zalian Posta Company (APC) manufoctures several varieties of pusta. On january 1, AlPC had excess commodity inventories carried at ocquisition cost of \$1, 000000 , and with a current value of 51,200,000. These commodities could be sold or manufactured into pasta tater in the year. To hedge askainst possible declines in the value of its commodities imentory, on january 6 ApC took a short position in commodity futures, obligating the company to deliver the comimodities in February for $1,200,000. The futures exchange requires a $20,000 margin deposit, On February 19, the futures price decl'ned to $1,150,000 and the company dosed out its futures. concract, APC sold its inventory for 31,100.000 in cash on March 2 . fequed A. Prepare the journal entries related to AlPCs futures contract and sale of commodities imentory: Assume a perpetual imvertory system, that spot and futures prices move in tandem, and the futures position qualifies for hedge accounting. All income effects for the inventories and related hedges are reoortert in cost of onar pricts a. Prepure the journal entries related to AlPCs futures contract and sale of commodities inventory. Assurne a perpetual invertory system, that spot and futures prises move in tandem, and the futures position qualifies for hedge accountine. A incoma affarte ias ins inventories and related hed b. By how much would AIPCy profit decrease if the hedge was not undertaken? Fair Value Hedge: Short in Commodity Futures Amenisan zalian Posta Company (APC) manufoctures several varieties of pusta. On january 1, AlPC had excess commodity inventories carried at ocquisition cost of \$1, 000000 , and with a current value of 51,200,000. These commodities could be sold or manufactured into pasta tater in the year. To hedge askainst possible declines in the value of its commodities imentory, on january 6 ApC took a short position in commodity futures, obligating the company to deliver the comimodities in February for $1,200,000. The futures exchange requires a $20,000 margin deposit, On February 19, the futures price decl'ned to $1,150,000 and the company dosed out its futures. concract, APC sold its inventory for 31,100.000 in cash on March 2 . fequed A. Prepare the journal entries related to AlPCs futures contract and sale of commodities imentory: Assume a perpetual imvertory system, that spot and futures prices move in tandem, and the futures position qualifies for hedge accounting. All income effects for the inventories and related hedges are reoortert in cost of onar pricts a. Prepure the journal entries related to AlPCs futures contract and sale of commodities inventory. Assurne a perpetual invertory system, that spot and futures prises move in tandem, and the futures position qualifies for hedge accountine. A incoma affarte ias ins inventories and related hed b. By how much would AIPCy profit decrease if the hedge was not undertaken
