Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Chapter 9.M, Problem 6.2E
To determine
Journal Entries:
To calculate:
The effect on earnings,ifthe
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Tyson Inc. has an account payable in Swedish krona due in 60 days. Which would be an appropriate hedge?
Question 9 options:
Enter into a forward contract to sell Swedish krona in two months
Borrow Swedish krona for 60 days for the purpose of a money market hedge
Buy a put option on the Swedish krona, expiring in 60 days
Buy a call option on the Swedish krona, expiring in 60 days
13. Indang Company requires 40,000 kilos of soya beans each month in its operations. To eliminate the price risk associated with the purchase of soya beans, on December 1, 2011, Indang entered into a futures contract as a cash flow hedge to buy 40,000 kilos of soya beans at P150 per kilo on March 1, 2012. The market price on December 31, 2011 and March 1, 2012 is P160 per kilo. The appropriate discount rate is 9% and the present value of 1 at 9% for one period is 0.917. What amount should be recognized by Indang Company on December 31, 2011 as derivative asset or liability?
a. 400,000 asset
b. 400,000 liability
c. 366,800 asset
d. 366,800 liability
MHF believes the price of Amazon is going to fall substantially over the next 8 months. MHF uses an option (use the January 2024 contract with an exercise price of $95) to hedge the risk as it owns 10 million shares of Amazon. It will hedge exactly 50% of its position. Identify the type of option most likely used. Show the total position (please put this in a table) of the spot and derivative at expiration if the price of Amazon at expiration is
a) $62;
b) $77;
c) $93;
d) $112;
e) $128.
Only typed answer
Chapter 9 Solutions
Advanced Accounting
Ch. 9.M - Prob. 1UTICh. 9.M - Prob. 2UTICh. 9.M - Prob. 3UTICh. 9.M - Prob. 4UTICh. 9.M - Prob. 5UTICh. 9.M - Prob. 1ECh. 9.M - Prob. 2ECh. 9.M - Prob. 3ECh. 9.M - Prob. 4.1ECh. 9.M - Prob. 4.2E
Ch. 9.M - Prob. 4.3ECh. 9.M - Prob. 4.4ECh. 9.M - Prob. 4.5ECh. 9.M - Prob. 4.6ECh. 9.M - Prob. 5ECh. 9.M - Prob. 6.1ECh. 9.M - Prob. 6.2ECh. 9.M - Prob. 7ECh. 9.M - Prob. M.1.1PCh. 9.M - Prob. M.1.2PCh. 9.M - Prob. M.2.1PCh. 9.M - Prob. M.2.2PCh. 9.M - Prob. M.3PCh. 9.M - Prob. M.4.3PCh. 9.M - Prob. M.4.4PCh. 9.M - Prob. M.4.5PCh. 9.M - Prob. M.4.6PCh. 9.M - Prob. M.5PCh. 9.M - Prob. M.6PCh. 9.M - Prob. M.7.1PCh. 9.M - Prob. M.7.2PCh. 9.M - Prob. M.7.3PCh. 9 - Prob. 1UTICh. 9 - Prob. 2UTICh. 9 - Prob. 3UTICh. 9 - Prob. 1.1ECh. 9 - Prob. 1.2ECh. 9 - Exercise 2 (LO 3) The accounting issues associated...Ch. 9 - Prob. 3.1ECh. 9 - Prob. 3.2ECh. 9 - Prob. 3.3ECh. 9 - Prob. 4.1ECh. 9 - Prob. 4.2E
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