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MY NUMBERS FOR EXERCISE 4 ARENT ADDING UP. CAN ANYONE HELP ME? Stark, Inc., placed an order for inventory costing 500,000 FC with a foreign
MY NUMBERS FOR EXERCISE 4 ARENT ADDING UP. CAN ANYONE HELP ME?
Stark, Inc., placed an order for inventory costing 500,000 FC with a foreign vendor on April 15 when the spot rate was 1 FC = $0.683. Stark entered into a 90-day forward contract or purchase 500,000 FC at a forward rate of 1 FC = $0, 696. Stark has a June 30 year-end. On that date, the spot rate was 1 FC = $0.691, and the forward rate on the contract was 1 FC = $0.695. Changes in the current value of the forward contract are measured as the present value of the forward tares over time and no separate accounting is given the time value of the contract. The relevant discount rate is 6%. Prepare all relevant journal entries suggested by the above facts assuming that the hedge is designated as a fair value hedge. Prepare a partial income statement and balance sheet as of the company's June 30 year-end that reflect the above factsStep by Step Solution
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