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St. Philip Company ordered parts costing 200,000 from a foreign supplier on January 15 when the spot rate was $0.27 per . A one-month forward

St. Philip Company ordered parts costing 200,000 from a foreign supplier on January 15 when the spot rate was $0.27 per . A one-month forward contract was signed on that date to purchase 200,000 at a forward rate of $0.29. The forward contract is properly designated as a fair value hedge of the 200,000 firm commitment. On February 15, when the company receives the parts, the spot rate is $0.28. At what amount should St. Philip Company carry the parts inventory on its books?

Multiple Choice

  • $58,000
  • $54,000
  • $56,000
  • $55,000

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