Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need the answer as soon as possible Entity X is based in the UK and has a December year end. Its functional currency is

I need the answer as soon as possible image text in transcribed

Entity X is based in the UK and has a December year end. Its functional currency is sterling (GBP) Entity X forecasts the purchase of a machine from a US supplier and will be paid for in dollars (USD). The purchase is expected to occur on 1st January 20X3. It is now 30th September 20X2. The cost of the machine is $15,000. The exchange rate is $1.5=1 giving a cost to Entity X of 10,000. Entity X hedges the exchange risk be entering into a forward contract for $15,000 @ $1.5=1. This is designated as a cash flow hedge and accounted for accordingly. Entity X is based in the UK and has a December year end. Its functional currency is sterling (GBP) Entity X forecasts the purchase of a machine from a US supplier and will be paid for in dollars (USD). The purchase is expected to occur on 1st January 20X3. It is now 30th September 20X2. The cost of the machine is $15,000. The exchange rate is $1.5=1 giving a cost to Entity X of 10,000. Entity X hedges the exchange risk be entering into a forward contract for $15,000 @ $1.5=1. This is designated as a cash flow hedge and accounted for accordingly

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

Recommended Textbook for

Government Contracts Audits And Compliance

Authors: Gregory A. Garrett

1st Edition

0808023926, 978-0808023920

More Books

Students also viewed these Accounting questions

Question

c. What were the reasons for their move? Did they come voluntarily?

Answered: 1 week ago

Question

5. How do economic situations affect intergroup relations?

Answered: 1 week ago