Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Icebreaker Company (a U.S.-based company sells parts to a foreign customer on December 1, 2020, with payment of 22,000 dinars to be received on March

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Icebreaker Company (a U.S.-based company sells parts to a foreign customer on December 1, 2020, with payment of 22,000 dinars to be received on March 1, 2021. Icebreaker enters into a forward contract on December 1, 2020, to sell 22.000 dinars on March 1, 2021. The forward points on the forward contract are excluded in assessing hedge effectiveness and are amortized to net income using a straight-line method on a monthly basis. Relevant exchange rates for the dinar on various dates are as follows: Date December 1, 2020 December 31, 2020 March 1, 2021 Spot Rate $ 4.00 4.10 4.25 Forward Rate (to March 1, 2021) $ 4.075 4.200 N/A Icebreaker must close its books and prepare financial statements at December 31 Company purchases materials from a foreign supplier on December 1, 2020, with payment of 22,000 dinars to be made on March 1 2021 The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. In December 1, 2020, Brandiin enters into a forward contract to purchase 22,000 dinars on March 1, 2021 8-1. Assuming that icebreaker designates the forward contract as a cash flow hedge of a foreign currency payable prepare journal entries for the import purchase and foreign currency forward contract in US dollars. 0-2. What is the impact on 2020 net income? 0-3. What is the impact on 2021 net income? .-4. What is the impact on net income over the two accounting periods? b-1. Assuming that Icebreaker designates the forward contract as a fair value hedge of a foreign currency payable, prepare Journal entries for the import purchase and foreign currency forward contract in US dollars. b-2. What is the impact on net income in 2020 and in 2021? b-3. What is the impact on net income over the two accounting periods? Complete this question by entering your answers in the tabs below. Reg A1 Reg A2 to 4 Reg : Reg 2 to 33 Assuming that Icebreaker designates the forward contract as a cash flow hedge of a foreign currency payable, prepare journal entries for the import purchase and foreign currency forward contract in U.S. dollars. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) Show less View transaction list Journal entry worksheet Record the purchase of materials. ng periods? Complete this question by entering your answers in the tabs below. Reg A1 Reg A2 to A4 Reg B1 Reg 2 to B3 2-2. What is the impact on phy net income? a-3. What is the impact on 24. net income? 2-4. What is the impact on net income over the two accounting periods? (Do not round Intermediate calculations. Negative amounts should be entered with a minus sign) Show less 3-2 Impact on 2020 net income 3-3 Impact on 2021 net income 3-4 Impact on net income over 2020 and 2021 Req A1 Reg A2 to A4 Reg B1 Reg B2 to B3 Assuming that Icebreaker designates the forward contract as a fair value hedge of a foreign currency payable, prepare journal entries for the import purchase and foreign currency forward contract in U.S. dollars. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) View transaction list Show less Journal entry worksheet RA1 Reg A2 He 2 to -2. What is the impact on not income 2020 and in 2021 b-3. What the impact on net income over the accounting periode (Do not intermediate katin e amantha --2pact on 2020 net income moact on 2021 net income 2020 2021

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

Mathematics Of Finance An Intuitive Introduction

Authors: Donald G. Saari

1st Edition

3030254429, 978-3030254421

More Books

Students also viewed these Accounting questions