Question
On October 5, 2020, Kappa Cloth Ltd. enters into a forward contract to purchase 10,000 metres of cotton fabric at $1 per metre, good until
On October 5, 2020, Kappa Cloth Ltd. enters into a forward contract to purchase 10,000 metres of cotton fabric at $1 per metre, good until February 1, 2021. At December 31, 2020, the forward price for February 2021 delivery of cotton fabric has increased to $1.06 per metre. The adjusting entry at December 31, 2020 would be
a) DerivativesFinancial Assets/Liabilities............. 600
Gain or Loss on Derivatives............................................................ 600
b) Gain or Loss on Derivatives.................................................................. 600
DerivativesFinancial Assets/Liabilities..... 600
c) No entry required.
d) DerivativesFinancial Assets/Liabilities............. 600
Unrealized Gain or Loss (OCI)................................ 600
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
ICSA Study Text In Management Accounting
Authors: Richard Lyall
4th Edition
186072308X, 978-1860723087
