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Question;29. The time value of an option;is the difference between the;a.;premium paid and its current rate.;b.;premium paid and its intrinsic value.;c.;exercise price and its current rate.;d. call option price and the;put option price.;30. The two distinguishing;characteristics of a financial instrument are;a.;one or more options and one or more exchange rates.;b.;one or more underlyings and one or more notional;amounts.;c.;cash flows and economic exchange.;d. a per share price and a;quantity.;31.;Hugh, Inc. purchased merchandise for 300,000 FC from;a British vendor on November 30, 20X3. Payment in British pounds is due January;31, 20X4. Exchange rates to purchase 1 FC is as follows:.................;Spot;Nov. 30, 20X3;Dec. 31, 20X3;$1.65;$1.62;30;day...............;$1.64;$1.59;60;day...............;$1.63;$1.56;In the December 31, 20X3 income statement, what amount should;Hugh report as foreign exchange gain from this transaction?;a.;$12,000;b.;$9,000;c.;$6,000;d. $0;32.;Wild, Inc. sold merchandise for 500,000 FC to a;foreign vendor on November 30, 20X5. Payment in foreign currency is due January;31, 20X6. Exchange rates to purchase 1 foreign currency unit are as follows:.............;Spot;Nov. 30, 20X5;Dec. 31, 20X5;Jan. 31, 20X6;$1.49;$1.45;$1.44;30;day...........;$1.48;$1.43;$1.43;60;day...........;$1.46;$1.41;$1.42;In the year;in which the sale was made, 20X5, what amount should Wild report as foreign;exchange gain/loss from this transaction?;a.;$25,000;b.;$20,000;c.;$5,000;d. $0;10-9;Chapter 10;33.;Pile, Inc. purchased merchandise for 500,000 FC from;a foreign vendor on November 30, 20X5. Payment in foreign currency is due;January 31, 20X6. On the same day, Pile signed an agreement with a foreign;exchange broker to buy 500,000 FC on January 31, 20X4. Exchange rates to purchase;1 FC are as follows:.............;Spot;Nov. 30, 20X5;Dec. 31, 20X5;Jan. 31, 20X6;$1.49;$1.45;$1.44;30;day...........;$1.48;$1.43;$1.43;60;day...........;$1.46;$1.41;$1.42;What will be the adjustment to the account payable included in;the journal entry record on November 30, 20X5?;a.;$20,000 debit;b.;$20,000 credit;c.;$30,000 debit;d. $0;34.;Larson, Inc. sold merchandise for 600,000 FC to a;foreign vendor on November 30, 20X5. Payment in foreign currency is due January;31, 20X6. On the same day, Larson signed an agreement with a foreign exchange;broker to sell 600,000 FC on January 31, 20X6. Exchange rates to purchase 1 FC;are as follows:.............;Spot;Nov. 30, 20X5;Dec. 31, 20X5;Jan. 31, 20X6;$1.49;$1.46;$1.43;30;day...........;$1.48;$1.43;$1.44;60;day...........;$1.47;$1.40;$1.42;What will;be the amount of the Forward Contract Receivable-Dollars on November 30, 20X5?;a.;$894,000;b.;$888,000;c.;$882,000;d. $858,000;10-10;Chapter 10;35.;Happ, Inc. agreed to purchase merchandise from a;British vendor on November 30, 20X3. The goods will arrive on January 31, 20X4;and payment of 100,000 British pounds is due February 28, 20X4. On November 30;20X3, Happ signed an agreement with a foreign exchange broker to buy 100,000;British pounds on February 28, 20X4. Exchange rates to purchase 1 British pound;are as follows;Spot...;Nov. 30, 20X3;Dec. 31, 20X3;Jan. 31, 20X4;Feb. 28, 20X4;$1.65;$1.62;$1.59;$1.57;30;day.;$1.64;$1.59;$1.60;$1.59;60;day.;$1.63;$1.56;$1.58;$1.58;Because of;this commitment hedge, Happ, Inc. will record the merchandise at what value;when it arrives in January?;a.;$165,000;b.;$164,000;c.;$160,000;d. $159,000;36. In a hedge of a forecasted transaction;gains or losses on derivative instruments prior to the occurrence of the actual;transaction should be reported as;a.;a component of stockholders' equity.;b.;a component of other comprehensive income.;c.;an extraordinary item.;d. income from continuing operations.;37. Current;disclosure requires users of hedging instruments to provide information about;all of the following except;a.;objectives of using hedging instruments.;b.;descriptions of various types of hedges entered;into.;c.;the original cost of entering into the derivative;instrument hedge.;d. how gains;and losses are recognized in earnings or other comprehensive income.

 

Paper#44393 | Written in 18-Jul-2015

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