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Q.7 Date October 1, 2020 December 31, 2020 January 31, 2021 Spot Rate $ 0.26 0.29 0.31 Forward Rate (to January 31, 2021) $0.30 0.33
Q.7
Date October 1, 2020 December 31, 2020 January 31, 2021 Spot Rate $ 0.26 0.29 0.31 Forward Rate (to January 31, 2021) $0.30 0.33 N/A Mertag 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. Mertag must close its books and prepare financial statements on December 31 Discounting to present value can be Ignored. a. Prepare Journal entries for the foreign currency forward contract, foreign currency firm commitment, and export sele. b. Determine the net benefit, if any, realized by Mertag from entering into the forward contract. Complete this question by entering your answers in the tabs below. Required A Required B Determine the net benefit, if any, realized by Mertag from entering into the forward contract. (Do not round Intermediate calculations. Negative amount should be entered with a minus sign.) Net benefit Step by Step Solution
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