Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Cash Flow Hedge: Call Options
On March 1, 2020, Prairie Farms forecasts that it will purchase 1,000,000 units of a commodity in six months. To hedge against rising prices, Prairie Farms invests in 1,000,000 September 2020 call options for the commodity. The call options have a strike price of $3.30 per unit, and cost $0.65 each. The current market price of the commodity is $3.25 per unit. The intrinsic value of the options is designated as the hedging instrument, and the option investment qualifies as a cash
flow hedge of the forecasted purchase. Changes in option time value are reported directly in income. On June 30, 2020, the market price of the commodity is $3.40 per unit, the options have a market price of $0.50 per unit, and Prairie Farms sells the options.
Required
Prepare the journal entry to record the sale of the options.
Compare the two numbers. What do you think is causing this difference and eExplain whether you believe the company has invested in the appropriate types of assets for this company
Determine the missing amounts associated with each letter. - Determine the June 30 balances for each of the inventory accounts and factory overhead.
Rob, Bill, and Steve form Big Company. Rob performs $45,000 of services for his shares of the company. Bill transferred property with a basis of $5,000 for $75,000 of stock. Steve contributes cash of $100,000 for his shares. Which of the three must r..
Shark Company purchased 70% interest in Fish Company on July 1, 2014.- prepare a consolidation worksheet for Shark and Fish for the year ending December 31, 2014.
The Director Decided to rejected the Excess application money on 2000 share as refunded .Show the necessary Journal entries.
Guy Man: president, secretary, treasurer, director, and sole shareholder. Manages all aspects of operations. Only person with a broker's license. Works 12 hour days with few off days. Salary set at $24,000 per year for managing company. As an expert ..
You have recently accepted a position with Vitex, Inc., the manufacturer of a popular consumer product. During your first week on the job, the vice president has been favorably impressed with your work. How many units were produced last period? How m..
Assuming that Diane spends the remainder of her income on consumption, what is her saving? - Is she a net lender or net borrower?
What is the premise behind the equity method? Do the journal entries related to the equity method reflect what is really happening to the investment? Are the fair value method entries a better reflection of the investment?
You have been asked by the owners to look into these issues and provide the appropriate accounting treatment for patents - You have been hired as a consultant for XYZ Research Co. XYZ Research Co. incorporated in 2010.
What is the standard quantity of material and the standard labor time for Septembers production and compute the direct material and direct labor variances - how might the sales and production managers explain the direct material variances?
Payment of cash dividends are recorded as a decrease in cash and an increase in expenses a decrease in cash and a decrease in retained earnings an increase in dividend expense and a decrease in cash a decrease in cash and a decrease in..
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd