ADV. ACCT CONNECT STAND ALONE
13th Edition
ISBN: 9781266295744
Author: Hoyle
Publisher: MCG
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Chapter 9, Problem 22P
To determine
Identify the net impact on DS Company’s 2018 net income from
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What is the net impact on Dos Santos Company s 2017 net income as a result of this hedge of a forecasted foreign currency transaction? a. $-0-. b. $400 decrease in net income. c. $1,000 decrease in net income. d. $1,400 decrease in net income. On November 1, 2017, Dos Santos Company forecasts the purchase of raw materials from a Brazilian supplier on February 1, 2018, at a price of 200,000 Brazilian reals. On November 1, 2017, Dos Santos pays $1,500 for a three-month call option on 200,000 reals with a strike price of $0.40 per real. Dos Santos properly designates the option as a cash flow hedge of a forecasted foreign currency transaction. On December 31, 2017, the option has a fair value of $1,100. The following spot exchange rates apply: _______________________________ U.S. Dollar per Date ___________________________ Brazilian Real November 1, 2017 .......................... $0.40 December 31, 2017......................... 0.38 February 1, 2018…
a. How much is the ForEx gain or (loss) on December 31, 2016?
b. How much is the foreign currency receivable as of December 31,2016?
c. How much is the peso payable balance as of December 31, 2016?
d. How much is the ForEx gain or Loss on February 1, 2017?
e. How much is the Net ForEx gain or (loss)?
The value of a multinational company (MNC) increases by the _________ of the expected foreign cash flows and ________ of foreign currencies denominating these cash flows.
A.
decrease; appreciation
B.
decrease; depreciation
C.
increase; depreciation
D.
increase; appreciation
Chapter 9 Solutions
ADV. ACCT CONNECT STAND ALONE
Ch. 9 - Prob. 1QCh. 9 - Prob. 2QCh. 9 - What factors create a foreign exchange gain on a...Ch. 9 - In what way is the accounting for a foreign...Ch. 9 - Prob. 5QCh. 9 - How does a foreign currency option differ from a...Ch. 9 - Prob. 7QCh. 9 - Why would a company prefer a foreign currency...Ch. 9 - How do companies report foreign currency...Ch. 9 - How does a company determine the fair value of a...
Ch. 9 - What is hedge accounting?Ch. 9 - Prob. 12QCh. 9 - What are the differences in accounting for a...Ch. 9 - What are the differences in accounting for a...Ch. 9 - What are the differences in accounting for a...Ch. 9 - Prob. 16QCh. 9 - Prob. 1PCh. 9 - Prob. 2PCh. 9 - Prob. 3PCh. 9 - Prob. 4PCh. 9 - Prob. 5PCh. 9 - Grace Co. had a Chinese yuan payable resulting...Ch. 9 - Prob. 7PCh. 9 - Prob. 8PCh. 9 - Prob. 9PCh. 9 - Prob. 10PCh. 9 - Prob. 11PCh. 9 - Prob. 12PCh. 9 - On March 1, Pimlico Corporation (a U.S.-based...Ch. 9 - Torres Corporation (a U.S.-based company) expects...Ch. 9 - Prob. 15PCh. 9 - What was the net impact on Jensen Companys 2018...Ch. 9 - What was the net increase or decrease in cash flow...Ch. 9 - What is the net impact on Micros net income for...Ch. 9 - What is the net impact on Micros net income for...Ch. 9 - What is Micros net increase or decrease in cash...Ch. 9 - What is the net impact on Dos Santos Companys 2017...Ch. 9 - Prob. 22PCh. 9 - Prob. 23PCh. 9 - Prob. 24PCh. 9 - Prob. 25PCh. 9 - Prob. 26PCh. 9 - Prob. 27PCh. 9 - Prob. 28PCh. 9 - Prob. 29PCh. 9 - Prob. 30PCh. 9 - Prob. 31PCh. 9 - Use the same facts as in Problem 31 except that...Ch. 9 - On June 1, Alexander Corporation sold goods to a...Ch. 9 - On June 1, Cairns Corporation purchased goods...Ch. 9 - Prob. 35PCh. 9 - Prob. 36PCh. 9 - Prob. 37PCh. 9 - Prob. 38PCh. 9 - Prob. 39PCh. 9 - Prob. 40PCh. 9 - Based on past experience, Leickner Company expects...Ch. 9 - Prob. 42PCh. 9 - RESEARCH CASEINTERNATIONAL FLAVORS AND FRAGRANCES...Ch. 9 - Prob. 2DYSCh. 9 - Prob. 3DYSCh. 9 - ANALYSIS CASECASH FLOW HEDGE On February 1, 2017,...Ch. 9 - Prob. 5DYSCh. 9 - COMMUNICATION CASEFORWARD CONTRACTS AND OPTIONS...
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- a. How much is the ForEx gain or loss on December 31, 2016? b. How much is the ForEx gain or Loss on March 1, 2017? c. How much is the Peso Receivable from XD on March 1, 2017 prior to collection? d. How much is the Foreign Currency Payable on March 1, 2017 prior to settlement? e. How much is the Net ForEx gain or (loss)?arrow_forwardGive answer from reference with explanation 11. Which of the following best describes the effect on Nakamoto's 2021 earnings when stated in U.S. dollars?a. Earnings will be lower because the average value of the yen depreciated during 2021.b. Earnings will be higher because the U.S. dollar appreciated during 2021.c. Earnings will be lower because the average value of the yen appreciated during 2021. 12. Compute Nakamoto's retained earnings in U.S. dollars as of December 31, 2021.a. $1,000,000.b. $1,110,000.c. $1,225,000. 13. Compute the cumulative translation adjustment as of December 31, 2021.a. ($480,000)b. - 0 -c. $480,000 14. For the year ended December 31, 2021, which of the following ratios would be unaffected by changing the functional currency to the U.S. dollar?a. Inventory turnover.b. Accounts receivable turnover.c. Current ratio.arrow_forwardA shift to expecting depreciation in the domestic currency will lead to: a. an inflow of capital to domestic economy b. an increase in the demand for domestic country currency- denominated financial assets c. uncovered interest parity d. a decrease in the demand for domestic country currency denominated financial assetsarrow_forward
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