Question
On December 1, 20X1, Sycamore Company acquired a 90-day speculative forward contract to sell 160,000 at a forward rate of 1 = $0.50. The rates
On December 1, 20X1, Sycamore Company acquired a 90-day speculative forward contract to sell 160,000 at a forward rate of 1 = $0.50. The rates are as follows:
| Date | Spot Rate | Forward Rate for March 1 |
|---|---|---|
| December 1, 20X1 | 1 = $0.52 | 1 = $0.50 |
| December 31, 20X1 | 1 = 0.51 | 1 = 0.48 |
| March 1, 20X2 | 1 = 0.49 |
Required:
Determine the effects of this speculation on 20X1 income before income taxes.
Determine the effects of this speculation on 20X2 income before income taxes.
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Essentials of Accounting for Governmental and Not-for-Profit Organizations
Authors: Paul A. Copley
10th Edition
007352705X, 978-0073527055
