Answered step by step
Verified Expert Solution
Question
1 Approved Answer
On November 15,2022 , a U.S. company takes delivery of merchandise costing C$1,000,000 from a Canadian supplier and records an account payable. On the same
On November 15,2022 , a U.S. company takes delivery of merchandise costing C$1,000,000 from a Canadian supplier and records an account payable. On the same date, the company enters a forward contract locking in the U.S. dollar purchase price of C$1,000,000, for delivery on April 15, 2023. The forward contract is closed and payment is made to the supplier on April 15, 2023. The company's accounting year ends on December 31. Assuming the company still holds the merchandise at December 31, 2022, at what amount is the merchandise reported? $695,000$705,000$750,000$765,000 What is the net exchange gain or loss for 2023 ? $15,000gain$25,000loss$10,000loss$25,000gain On November 15,2022 , a U.S. company issues a purchase order to a Canadian supplier for merchandise costing C$1,000,000. On the same date, the company enters a forward contract locking in the U.S. dollar purchase price of C$1,000,000, for delivery on April 15, 2023. The forward qualifies as a hedge of the firm commitment. Delivery of the merchandise takes place on March 1, 2023, and the forward contract is closed and payment is made to the supplier on April 15, 2023. How is the forward contract reported on the company's December 31, 2022, balance sheet? $60,000asset $60,000 liability $55,000 liability )\$55,000 asset On November 15,2022 , a U.S. company issues a purchase order to a Canadian supplier for merchandise costing C$1,000,000. On the same date, the company enters a forward contract locking in the U.S. dollar purchase price of C$1,000,000, for delivery on April 15, 2023. The forward qualifies as a hedge of the firm commitment. Delivery of the merchandise takes place on March 1, 2023, and the forward contract is closed and payment is made to the supplier on April 15,2023. After delivery, at what amount is the merchandise carried on the U.S. company's books? $695,000$700,000$705,000$715,000 A U.S. company expects to buy merchandise from a Canadian supplier for approximately C$1,000,000, in the middle of April. On November 15 , 2022 , the company enters a forward contract locking in the U.S. dollar purchase price of C$1,000,000, for delivery on April 15, 2023. The forward qualifies as a hedge of the forecasted transaction. Delivery of the merchandise takes place on April 15, 2023, and the forward contract is closed and payment is made to the supplier. At what amount is the merchandise reported on delivery on April 15, 2023? $695,000 $705,000 $740,000 $750,000 A U.S. company expects to buy merchandise from a Canadian supplier for approximately C$1,000,000, in the middle of April. On November 15 , 2022 , the company enters a forward contract locking in the U.S. dollar purchase price of C$1,000,000, for delivery on April 15, 2023. The forward qualifies as a hedge of the forecasted transaction. Delivery of the merchandise takes place on April 15, 2023, and the forward contract is closed and payment is made to the supplier. At what amount is the merchandise reported on delivery on April 15, 2023? $695,000 $705,000 $740,000 $750,000 A U.S. company expects to buy merchandise from a Canadian supplier for approximately C$1,000,000, in the middle of April. On November 15 , 2022 , the company enters a forward contract locking in the U.S. dollar purchase price of C$1,000,000, for delivery on April 15,2023 . The forward qualifies as a hedge of the forecasted transaction. Delivery of the merchandise takes place on April 15, 2023, and the forward contract is closed and payment is made to the supplier. When the merchandise is sold, at what amount will the company report cost of goods sold? $695,000$705,000$740,000$750,000 On March 1, 2023, a U.S. company enters a forward contract locking in the selling price of C$1,000,000, for delivery on April 15 , 2023 . The contract does not qualify for hedge accounting. What is the gain or loss on the forward contract that is reported on the company's 2023 income statement? $5,000loss$20,000gain$25,000loss$5,000gain
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started