Question
On December 1, 20X1, Sycamore Company acquired a 90-day speculative forward contract to sell 130,000 at a forward rate of 1 = $0.56. The rates
On December 1, 20X1, Sycamore Company acquired a 90-day speculative forward contract to sell 130,000 at a forward rate of 1 = $0.56. The rates are as follows:
| Date | Spot Rate | Forward Rate for March 1 | ||||||||||
| December 1, 20X1 | 1 | = | $ | 0.58 | 1 | = | $ | 0.56 | ||||
| December 31, 20X1 | 1 | = | 0.57 | 1 | = | 0.54 | ||||||
| March 1, 20X2 | 1 | = | 0.55 | |||||||||
Required: a. Determine the effects of this speculation on 20X1 income before income taxes.
b. Determine the effects of this speculation on 20X2 income before income taxes.
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Challenge Of Management Accounting Change
Authors: John Burns, Mahmoud Ezzamel, Robert Scapens
1st Edition
075066004X, 978-0750660044
