FV hedge accounting loss… what is the relevance of the $0.70 quote?

  • Creator
    Topic
  • February 22, 2016 at 8:15 pm #200248
    Biff-1955-Tannen
    Participant

    Is the $0.70 quote on November 2 a 90 day futures? Or what is the relevance of the $0.70?

    On November 2, 20X1, Platt Co. entered into a 90-day futures contract to purchase 50,000 Swiss francs when the contract quote was $0.70. The purchase was for speculation in price movement. The following exchange rates existed during the contract period:

    30-Day Futures Spot Rate

    November 2, 20X1 $.62 $.63

    December 31, 20X1 .65 .64

    January 30, 20X2 .65 .68

    What amount should Platt report as foreign currency exchange loss in its income statement for the year ended December 31, 20X1?

    AUD 93 Jan 16
    BEC 83 Feb 16
    FAR 83 Apr 16
    REG 84 May 16

    99% Ninja MCQ only

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