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Where an entity prepares consolidated financial statements, the equity method is applied to associates or joint ventures of the _________________________ in the consolidated financial statements,

  1. Where an entity prepares consolidated financial statements, the equity method is applied to associates or joint ventures of the _________________________ in the consolidated financial statements, and not in the accounts of the ________ itself.

a) parent; parent

b) parent and its subsidiaries; subsidiary

c) parent; subsidiary

d) parent and its subsidiaries; parent.

2- Which of the following statements about hedge accounting is TRUE?

a) Hedge accounting is mandatory.

b) Hedge accounting is applicable only if a receivable is being hedged.

c) Hedge accounting is optional.

d) Hedge accounting is applicable only if a liability is being hedged.

3- On March 1, 2022, Eddie Ltd. issued a purchase order to Liu Inc. to acquire a crane for $400,000 SGD. On the same day, Eddie entered into a forward contract to receive $400,000 SGD on July 31, 2022. The crane was delivered on June 1, 2022, and payment was made July 31, 2022. Eddie has an April 30 year-end. The following information has been provided: (SCD = $X.XXX)

Date Spot Rate Forward rate to July 31, 2022
March 1, 2022 .7686 .7810
April 30, 2022 .7702 .7818
June 1, 2022 .7940 .7985
July 31, 2022 .7995 n/a

Assume that the transaction qualifies as a cash flow hedge. On March 1, at what amount should the forward contract be reported?

a) $312,400

b) $317,600

c) $0

d) $319,800

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