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Option contract designated as a cash flow hedge of a forecasted foreign-currency-denominated sales transaction, strengthening SUS On January 5, 2022, our company receives a nonbinding
Option contract designated as a cash flow hedge of a forecasted foreign-currency-denominated sales transaction, strengthening SUS On January 5, 2022, our company receives a nonbinding purchase order for sale of merchandise to a customer in Slovakia, with delivery of the merchandise scheduled for june 30, 2022. The customer preliminarily agreed to pay 1,000,000 for the merchandise, and payment is due from the mer upon delivery. On January 5, 2022, our company aho purchases an option that gives our company the right to sell e, put) 1,000 any date until June 30, 2022, an American style option) for $1.301, the spot rate on January 5, 2002) On January 5, 2022, the fair of the option, the option premium is $32,400. In addition, our company elected to immediately include in the determination of income all of the change in option value attributable to factors excluded from the assessment of hedge effectiveness (ie, the non-intransit-value components time value). The relevant exchange rates and related balances for the period from January 5, 2022, to june 30, 2022, are in follows: Spee 2002 136 135 $32,400 72,400 $400 $400 $14,000 121 $130,00 87,200 43.200 Other Change Other value 2 40 a Derived from an option pricing model such as the Black-Scholes model b 1,080,000 $1301)-161,080.000-$1251) 1,080,000 $1.301)-(1,000,000 $1211) d fair value intrinsic value, equals the residual fair value derived from all sources except for intrinsic value (eg, time a. Prepare the journal entries to record all the adjustments required for the forecasted sale and option contract on January 5, 2022, March 31, 2022, and June 30, 2022. Note: If no journal entry is required select No erry-detet and entry-treat your Account answers and leave the Debit and Cred amount Hedged Transaction 22 tion recorded at fair Create 21-22 a a to recognize the change in the fair value of the outset, oam al CF Hedge: Entries assuming all of excluded option value change runs through income 31-22 022 to record the ner merament of the scan. 0 0 x 0 0 v 0 0 - 0 0 0 0 " 0 0 0 0 0 0 And the recufication of the cafada CF Hedge: Entries assuming excluded option value amortized through income
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