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Please heelllppppp unless youre unwilling to answer all parts!!!!!!!!! During the first quarter of Year 1, Blue Jeans Company enters into a cash flow hedge
Please heelllppppp unless youre unwilling to answer all parts!!!!!!!!!
During the first quarter of Year 1, Blue Jeans Company enters into a cash flow hedge related to its forecasted inventory purchases. Assuming that the company has a $50,000 gain on the 100 percent effective) cash flow hedge transaction that is settled in the third quarter of Year 1, what is the impact on the company's Year 1 financial statements if half of Blue Jeans' inventory is sold in Year 1 and the other half is sold in Year 2? O $25,000 gain reported in accumulated other comprehensive income and $25,000 reported in net earnings. $50,000 gain reported in accumulated other comprehensive income. $50,000 gain reported in net earnings. Footnote in financial statements until all inventory is sold in Year 2. Transportation International Inc. (TII) enters into a foreign exchange cash flow hedge during the first quarter of Year 1. The effective portion of the cash flow hedge in the current year results in a $35,000 gain and the ineffective portion results in a $10,000 loss based on the various settlement dates during Year 1. Assuming that the effective portion of the cash flow hedge will impact the company's Year 2 earnings when the derivatives transaction is fully settled, how will this foreign exchange cash flow hedge be reflected in the company's financial statements in Year 1? Both gain and loss reported in net earnings (only). O No impact on Year 1 financial statements. O Gain reported in other comprehensive income and loss reported in net earnings. Both gain and loss reported in other comprehensive income. On November 30, Year 1, Wholesale Foods Company (WFC) buys a put option on the stock of Simmons Enterprises Inc. (SEI). The terms of the put option give WFC the right to short 25,000 shares of SEI stock at a price of $45 per share over the next 60 days. In return, WFC pays an upfront $1.50 per share put option premium to the option writer. Assuming that the price of SEI stock drops to $41 on December 15 and WFC exercises the put option, what is the net gain or loss from the put option transaction reported by WFC during the calendar year (1)? O $37,500 loss O $62,500 gain O $100,000 gain O $137,500 gainStep by Step Solution
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