St. Philip Company ordered parts costing 200,000 from a foreign supplier on January 15 when the spot
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Question:
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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