Question

Lowell Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2018, with...

Lowell Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2018, with payment of 10 million Korean won to be received on January 15, 2019. The following exchange rates applied: Date Spot Rate Forward Rate to Jan.15 December 16, 2018 $ 0.00092 $ 0.00098 December 31, 2018 0.00090 0.00093 January 15, 2019 0.00095 0.00095 Assuming a forward contract was entered into on December 16 and Lowell designated this hedging as fair value hedge, what would be the net impact on Lowell Corp.'s 2018 income statement related to this transaction (excluding the effect of sales)? Assume an annual interest rate of 12%. The present value for 15 days (or half a month) at 12% is .9950. Multiple Choice $298 (gain). $700 (gain). $498 (gain). $300 (loss). $698 (gain).

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
What would be the net impact on Rutgers NY Corp.'s 2018 income statement related to this...
What would be the net impact on Rutgers NY Corp.'s 2018 income statement related to this transaction? Rutgers NJ Corp. sold parts to a Russian customer on December 16, 2018, with payment of 10 million Russian won to be received on January 15, 2019. The following exchange rates applied: Date Spot Rate Forward Rate on Jan 15 December 16, 2018 $ .00092 $ .00098 December 31, 2018 $ .00090 $ .00093 January 15, 2019 $ .00095 $ .00095 a. $...
On December 1, 2018, Keenan Company, a U.S. firm, sold merchandise to Velez Company of Canada...
On December 1, 2018, Keenan Company, a U.S. firm, sold merchandise to Velez Company of Canada for 400,000 Canadian dollars (CAD). Collection of the receivable is due on February 1, 2019. Keenan purchased a foreign currency put option with a strike price of $.94 (U.S.) on December 1, 2018. This foreign currency option is designated as a cash flow hedge. Relevant exchange rates follow: Date Spot Rate Option Premium 12/1/2018 $0.94 $0.06 12/31/2018 $0.95 $0.04 2/1/2019 $0.90
1. Bobcat Company, U.S.-based manufacturer of industrial equipment, just purchased a Korean company that produces plastic...
1. Bobcat Company, U.S.-based manufacturer of industrial equipment, just purchased a Korean company that produces plastic nuts and bolts for heavy equipment. The purchase price was Won7,500 million. Won1,000 million has already been paid, and the remaining Won6,500 million is due in six months. The current spot rate is Won950/$, and the 6-month forward rate is Won975/$. The six-month Korean won interest rate is 8% per annum, the six-month US dollar rate is 6% per annum. Bobcat can invest at...
On December 1, 2018, Keenan Company, a U.S. firm, sold merchandise to Velez Company of Canada...
On December 1, 2018, Keenan Company, a U.S. firm, sold merchandise to Velez Company of Canada for 150,000 Canadian dollars (CAD). Collection of the receivable is due on February 1, 2019. Keenan purchased a foreign currency put option with a strike price of $.97 (U.S.) on December 1, 2018. This foreign currency option is designated as a cash flow hedge. Relevant exchange rates follow: Date Spot Rate Option Premium December 1, 2018 $ 0.97 $ 0.05 December 31, 2018 $...
Bushnell Company, a U.S.-based exporter of fitness equipment received an order from a Japanese customer for...
Bushnell Company, a U.S.-based exporter of fitness equipment received an order from a Japanese customer for 100 units of treadmills at a price of ￥100,000 per unit (The total export amount is ￥10,000,000). Relevant exchange rates are as follows: Date Spot rate Forward rate 12/1/2017 ￥100/$ ￥108/$ 12/31/2017 ￥110/$ ￥112/$ 1/31/2018 ￥115/$ ￥115/$ Bushnell Company prepares financial statements on December 31. Required 1. Assume Bushnell shipped the treadmills on 12/1/2017, and payment was made on 1/31/2018. On 12/1/2017, Bushnell Company...
Norton Co., a U.S. corporation, sold inventory on December 1, 2018, with payment of 10,000 British...
Norton Co., a U.S. corporation, sold inventory on December 1, 2018, with payment of 10,000 British pounds to be received in sixty days. The pertinent exchange rates were as follows: Dec. 1 Spot rate: $ 1.7241 Dec. 31 Spot rate: $ 1.8182 Jan. 30 Spot rate: $ 1.6666 1) What amount of foreign exchange gain or loss should be recorded on December 31? 2) What amount of foreign exchange gain or loss should be recorded on January 30?
On October 1, 2018, Crusie Co. sold inventory to a customer in a foreign country, denominated...
On October 1, 2018, Crusie Co. sold inventory to a customer in a foreign country, denominated in 100,000 local currency units (LCU). Collection is expected in four months. On October 1, 2018, a forward exchange contract was acquired whereby Crusie Co. was to pay 100,000 LCU in four months (on February 1, 2019) and receive $78,000 in U.S. dollars. The spot and forward rates for the LCU were as follows: Date Rate Description Exchange Rate October 1, 2018 Spot Rate...
On October 15, 2018, our company sells to a retailer located in Austria 12,000 units of...
On October 15, 2018, our company sells to a retailer located in Austria 12,000 units of a product at a sales price of €30 per unit, and we require payment in Euros (€). The exchange rate on the date of sale is $1.24:€1, and the due date for payment is January 15, 2019. To mitigate the risk of exchange rate fluctuations between the sale date and the collection date, on October 15, 2018, our company enters into a forward contract...
What tools could AA leaders have used to increase their awareness of internal and external issues?...
What tools could AA leaders have used to increase their awareness of internal and external issues? ???ALASKA AIRLINES: NAVIGATING CHANGE In the autumn of 2007, Alaska Airlines executives adjourned at the end of a long and stressful day in the midst of a multi-day strategic planning session. Most headed outside to relax, unwind and enjoy a bonfire on the shore of Semiahmoo Spit, outside the meeting venue in Blaine, a seaport town in northwest Washington state. Meanwhile, several members of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT