On November 15, 2016, a U.S. company issues a purchase order to a supplier for merchandise costing C$1,000,000. On the same date, the company enters a forward contrast looking in the U.S. dollar purchase price of C$1,000,000, for delivery on April 15, 2017. The forward qualifies as a hedge of the firm commitment. Delivery of the merchandise takes places on March 1, 2017, and the forward contract is closed and payment is made to the supplier on April 15, 2017. Use the following spot rates and forward rates for 4/15/17 delivery of Canadian dollars. How is the forward contract reported on the company's December 31, 2016, balance sheet? $60,000 asset $60,000 liability $55,000 liability $55,000 asset $60,000 equity After delivery, at what amount is the merchandise carried on the U.S. company's books? $895,000 $900,000 $905,000 $915,000 $821,000 A sells to B for $375 a call option for 250 shares of stock exercisable at the stock's current market price of $75 per share and expiring in 60 days. At the end of 60-day period, the stock price fell to $70 per share. As a result: B is required to purchase 250 shares of stock at $75 per share. A has incurred a loss $375. B has incurred a loss of $375. B has gained $875. None of the above. A forward contract may be used for which of the following? A fair value hedge of an asset. A cash flow hedge of an asset. A fair value hedge of a liability. A cash flow hedge a liability. 1 and 3 2 and 4 1 and 2 1, 3, and 4 1, 2, 3, and 4

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