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On October 1 , 2 0 2 0 , Megart Co . ( a U . S . - based company ) receives an order
On October Megart Coa USbased company receives an order from a customer in Poland to deliver goods on January for a price of Polish zlotys PLN Megart enters into a forward contract on October to sell PLN on January Megart designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate, and, therefore, forward points are included in assessing hedge effectiveness. Exchange rates for $US per PLN follow. Date Spot Rate Forward Rate to January October $ $ December January What dollar amount will Megart report on its income statement for Sales to this customer?
On October Megart Coa USbased company receives an order from a customer in Poland to deliver goods on January for a price of Polish zlotys PLN Megart enters into a forward contract on October to sell PLN on January Megart designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate, and, therefore, forward points are included in assessing hedge effectiveness. Exchange rates for $US per PLN follow.
Date Spot Rate
Forward Rate to January
October $ $
December
January
What dollar amount will Megart report on its income statement for Sales to this customer?
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