On November 1, 20x2, Irvin Corp. sold goods to John Company for 130,000 rupee. Payment is due on March 30, 20x3. Also on November 1, 20x2, Irvin Corp. entered into a forward contract to sell 130,000 rupees on March 1, 20x3. The following are the exchange rates: Dec. 31, Nov. 1, 20x2 Mar. 30, 20x3 20x2 Spot rates 0.82 0.80 0.87 Forward rate 0.85 0.86 0.88 Irvin's incremental borrowing rate is 8%. What is the net impact on Irvin's income in 20x3 as a result of this hedge? 2.583 net gain 7,800 net gain 2,600 net gain O 7,783 net gain
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- On November 1, 20x2, Irvin Corp. sold goods to John Company for 130,000 rupee. Payment is due on March 30, 20x3. Also on November 1, 20x2, Irvin Corp. entered into a forward contract to sell 130,000 rupees on March 1, 20x3. The following are the exchange rates: Dec. 31, Nov. 1, 20x2 Mar. 30, 20x3 20x2 Spot rates 0.82 0.80 0.87 Forward rate 0.85 0.86 0.88 Irvin's incremental borrowing rate is 8%. What is the forex gain or loss on hedge item? 2,600 loss O 1,300 gain O 1,300 loss O 2,600 gainOn September 1, 20x1, Creed Co. sold merchandise to a foreign enty for 250,000 francs. Terms of thesale require payment in francs on February 1, 20x2. On September 1, 20x1, the spot exchange rate wasPhp1.20 per franc. At December 31, 20x1, the spot rate was Php1.19, but the rate increased to Php1.22by February 1, 20x2, when payment was received. Requirement: Provide the journal entries in 20x1 and 20x2On March 1, 20x1, ABC Co. sold inventory to a foreign company for FC 1,000,000 (FC meansforeign currency) when the spot exchange rate is FC 40: ₱1. The payment is due on April 1, 20x1.ABC Co. is concerned about the possible fluctuation in exchange rates, so on this date, ABC Co.entered into a forward contract to sell FC 1,000,000 for ₱25,000 to a broker. According to the termsof the forward contract, if FC 1,000,000 is worth less than ₱25,000 on April 1, 20x1, ABC Co. shallreceive from the broker the difference; if it is worth more than ₱25,000, ABC Co. shall pay the brokerthe difference. If the exchange rate on April 1, 20x1 is FC35: ₱1, how much is the net cash settlement? a. 3,571 receipt b. 3,571 payment c. 4,231 receipt d. 4,231 payment
- On March 1, 20x1, ABC Co. sold inventory to a foreign company for FC 1,000,000 (FC means foreign currency) when the spot exchange rate is FC 40: ₱1. The payment is due on April 1, 20x1. ABC Co. is concerned about the possible fluctuation in exchange rates, so on this date, ABC Co. entered into a forward contract to sell FC 1,000,000 for ₱25,000 to a broker. According to the terms of the forward contract, if FC 1,000,000 is worth less than ₱25,000 on April 1, 20x1, ABC Co. shall receive from the broker the difference; if it is worth more than ₱25,000, ABC Co. shall pay the broker the difference. If the exchange rate on April 1, 20x1 is FC35: ₱1, how much is the net cash settlement? 3,571 receipt 3,571 payment 4,231 receipt 4,231 payment If the exchange rate on April 1, 20x1 is FC50: ₱1, how much is the net cash settlement? 5,000 payment 5,000 receipt 6,223 payment 6,223 receipt If the exchange rate on March 31, 20x1 is FC45: ₱1, how much is the fair value of the…On December 12, 20X5, Dahl Company entered into three forward exchange contracts, each to purchase 100,000 francs in 90 days. The relevant exchange rates are as follows: Spot Rate Forward Rate for March 12, 20X6 December 12, 20X5 $ 0.88 $ 0.90 December 31, 20X5 0.98 0.93 3. Dahl entered into the first forward contract to manage the foreign currency risk from a purchase of inventory in November 20X5, payable in March 20X6. The forward contract is not designated as a hedge. At December 31, 20X5, what amount of foreign currency transaction gain should Dahl include in income from this forward contract? multiple choice $10,000 $0 $5,000 $3,000 4. Dahl entered into the second forward contract to hedge a commitment to purchase equipment being manufactured to Dahl’s specifications. At December 31, 20X5, what amount of foreign currency transaction gain should Dahl include in income from this forward contract? multiple choice $10,000 $0 $5,000…On November 29, 20x1, ABC Co. received a non-cancellable sale order for the exportation of inventories from a UK-based company. 68 The contract price is £40,000 (pound sterling). The contract term is FOB shipping point. The inventories were shipped on December 1, 20x1. The sale was settled on January 3, 20x2. The following are the exchange rates: November 29, 20x1 – ₱67:£1; December 1, 20x1 – ₱68:£1; December 31, 20x1 – ₱70:£1; January 3, 20x2 – ₱71:£1. How much sale revenue is recognized in 20x1?* a. P 2,840,000 b. P 2,720,000 c. P 2,680,000 d. P 2,800,000 pls. answer it asap thank you:)
- On December 12, 20X5, Dahl Company entered into three forward exchange contracts, each to purchase 100,000 francs in 90 days. The relevant exchange rates are as follows: Spot Rate Forward Rate for March 12, 20X6 December 12, 20X5 $ 0.88 $ 0.90 December 31, 20X5 0.98 0.93 1. The following information applies to Denton Incorporated’s sale of 10,000 foreign currency units under a forward contract dated November 1, 20X5, for delivery on January 31, 20X6: 11/1/X5 12/31/X5 Spot rates $ 0.80 $ 0.83 30-day forward rate 0.79 0.82 90-day forward rate 0.78 0.81 1. Denton entered into the forward contract to speculate in the foreign currency. In its income statement for the year ended December 31, 20X5, what amount of loss should Denton report from this forward contract? multiple choice $400 $300 $200 $0 2. On September 1, 20X5, Johnson Incorporated entered into a foreign exchange contract for speculative purposes by purchasing €50,000 for…3. On October 1, IJR International received an order from a Japanese customer for 2,500,000 Yen to be paid upon receipt of the goods, scheduled for December 1. The rates for $1 US are as follows: Spot rate, October 1 Forward rate, December 1 Spot rate, December 1 Exchange Rates for $1 for Yen 83 82 81 (a) Calculate what IJR would receive from the Japanese customer in US dollars using the spot rate at the time of the order. (b) Calculate what IJR would receive from the Japanese customer in US dollars using the spot rate at the time of payment. (c) Calculate the amount that IJR expects to receive on December 1 if IJR's policy is to hedge foreign currency transactions. (d) How can IJR protect itself from the risk of the transaction?[The following information applies to the questions displayed below.] Select the correct answer for each of the following questions. Note: Items 3 through 5 are based on the following: On December 12, 20X5, Dahl Company entered into three forward exchange contracts, each to purchase 100,000 francs in 90 days. The relevant exchange rates are as follows: Spot Rate Forward Rate for March 12, 20X6 December 12, 20X5 $ 0.88 $ 0.90 December 31, 20X5 0.98 0.93 2. On September 1, 20X5, Johnson Incorporated entered into a foreign exchange contract for speculative purposes by purchasing €50,000 for delivery in 60 days. The rates to exchange U.S. dollars for euros follow: 9/1/X5 9/30/X5 Spot rates $ 0.75 $ 0.70 30-day forward rate 0.73 0.72 60-day forward rate 0.74 0.73 In its September 30, 20X5, income statement, what amount should Johnson report as foreign exchange loss? multiple choice $2,500 $500 $1,500 $1,000
- Foreign currency transactions Use the following information for the next two questions: On December 1, 20x1, Entity A sells good to Entity B, on credit, for a total sale price of $1,000. Entity B settles the account on January 6, 20x1. Entity A's functional currency is the Philippine peso (P). The relevant exchange rate are as follows: Dec. 1, 20x1 Dec. 31, 20x1 Jan. 6, 20x1 P50:$1 P52:$1 P41:$1 How much is the foreign exchange gain (loss) to be recognized by Entity A on December 31, 20x1?On December 20, 2023, Momeier Company (a U.S.-based company) sold parts to a foreign customer at a price of 165,000 rials. Payment is received on January 10, 2024. Currency exchange rates are as follows: DateU.S. Dollar per RialDecember 20, 2023$ 1.26December 31, 20231.23January 10, 20241.19 Required: How does the fluctuation in the U.S. dollar per rial exchange rate affect Momeier's 2023 income statement? How does the fluctuation in the U.S. dollar per rial exchange rate affect Momeier's 2024 income statement? a. The rial receivable exchange b. The rial receivable exchange S in U.S. dollar value, resulting in a foreign of in 2023. in U.S. dollar value, resulting in a foreign of in 2024.HH Inc. had the following transactions:• On May 1, HH purchased parts from a foreign company (FC1) for a Philippine pesoequivalent value of P8,400 to be paid on June 20. The exchange rates were:• On July 1, HH sold products to a foreign customer for a Philippine peso equivalent ofP10,000 to be received on August 10. Foreign company’s local currency units is the FC2. The exchange rates were:May 1 1 FC1 = P0.0070June 20 1 FC1 = P0.0075July 1 1 FC2 = P0.20August 10 1 FC2 = P0.22REQUIRED:1. Assume that the two transactions are denominated in pesos. Prepare the entriesrequired for the dates of the transactions and their settlement in pesos.2. Assume that the two transactions are D nominated in the applicable local currencyunits of the foreign entities. Prepare the interest required for the dates of thetransactions and their settlement in the local currency units of the foreign company(FC1) and foreign customer (FC2).