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Only answer A, B & D P11-28A Comprehensive Problem: Four Uses of Forward Exchange Contracts without and with Time Value of Money Considerations LO 11-3
Only answer A, B & D
P11-28A Comprehensive Problem: Four Uses of Forward Exchange Contracts without and with Time Value of Money Considerations LO 11-3 On December 1, 20XI, Micro World Inc, entered into a 120-dlay forward contract to purchase 100,000 Australian dollars (AS). Micro World's fiscal year ends on December 31. The direct exchange rates follow: Required Prepare all journal entries for Micro World Inc, for the following independent situations: a. The forward contract was to manage the foreign currency risks from the purchase of furniture for A\$100,000 on December 1 . 20X1. with payment due on March 31.20X2. The forward contract is not designated as a hedge. b. The forward contract was to hedge a firm commitment agreement made on December 1,20X1, to purchase furniture on January 30, with payment due on March 31, 20X2. The derivative is designated as a fair value hedge. c. The forward contract was to hedge an anticipated purchase of furniture on January 30. The purchase took place on Page 618 January 30 with payment due on March 31.20X2. The derivative is designated as a cash flow hedge. The company uses the forward exchange rate to measure hedge effectiveness. d. The forward cuntract was for speculative purposes only
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