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Hi . I don't understand why the COGS must be the amortized forward points?How do we know that? I can't find an explanation in the
Hi I don't understand why the COGS "must" be the amortized forward points?How do we know that? I can't find an explanation in the book at all.
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Explanation:
The amount recognized as Cost of Goods Sold on March must be the current quarters amortization of forward points. Because COGS has a debit balance, net income has been reduced. A forward contract premium results in an increase in COGS, thus the Swiss franc must have sold at a premium on February in the threemonth forward market.Question
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Explanation
The amount recognized as Cost of Goods Sold on March must be the currentamortization of forward points. Because COGS has a debit balance, net income has been reduced. A forward contract premium results in an increase in COGS, thus the Swiss franc must have sold at a premium on February in the threemonth forward market.
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