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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
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 accordinglyStep by Step Solution
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