Pinas Corporation, A Philippine importer, purchased merchandise from the Star Company of Thailand for 100,000 Baht on March 1, 2015, when the spot rate for a Baht was 1.63. The accounts payable denominated on Baht was not due until May 30, 2015 so Pinas immediately entered into a 90-day forward contract to hedge the transaction against exchange rate changes. The contract was made at forward exchange rate of 1.65. Pinas settled the forward contract and the accounts payable on May 30, 2015, when the spot rate for Baht was 1.60. On the settlement of the forward contract on May 30, 2015, Pinas should record a forex gain or (loss) of: A. 5,000 B. (5,000) C. (2,000) D. 2,000
Pinas Corporation, A Philippine importer, purchased merchandise from the Star Company of Thailand for 100,000 Baht on March 1, 2015, when the spot rate for a Baht was 1.63. The accounts payable denominated on Baht was not due until May 30, 2015 so Pinas immediately entered into a 90-day forward contract to hedge the transaction against exchange rate changes. The contract was made at forward exchange rate of 1.65. Pinas settled the forward contract and the accounts payable on May 30, 2015, when the spot rate for Baht was 1.60. On the settlement of the forward contract on May 30, 2015, Pinas should record a forex gain or (loss) of:
A. 5,000
B. (5,000)
C. (2,000)
D. 2,000
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