How would the forward contract be reflected

Assignment Help Financial Management

Reference no: EM132056047

Car Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2013, with payment of 10 million Korean won to be received on January 15, 2014. The following exchange rates applied:

Spot rate

December 16, 2013 .00092

December 31, 2013 .00090

January 15, 2014 .00095

Forward rate

December 16, 2013 .00093

December 31, 2013 .00098

January 15, 2014 .00095

Assuming a forward contract was entered into, how would the forward contract be reflected on Car's December 31, 2013 balance sheet?

Foreign currency (liability).

Foreign exchange (liability).

Forward contract (asset).

Foreign currency (asset).

Forward contract (liability).

Reference no: EM132056047

Questions Cloud

Unique risks when calculating expected rates of return : Why do stock market investors seem to ignore unique risks when calculating expected rates of return?

Cash inflow computed by converting cash flow into dollars : What is the present value of the 406 million rupee cash inflow computed by first converting the cash flow into dollars

Recalculate npv based on the worst case sales volume : Impressed by your analysis of how each assumption affects NPV, the boss then asks you to recalculate NPV based on the worst case sales volume,

Negotiated contract to provide database installation : Your start-up company has negotiated a contract to provide a database installation for a manufacturing company in Poland.

How would the forward contract be reflected : Assuming a forward contract was entered into, how would the forward contract be reflected on Car's December 31, 2013 balance sheet?

Compute the book value and liquidation value : Compute the book value, liquidation value, replacement value and enterprise value per share of A&B.

Take the firm to collect its accounts receivable : The average accounts receivable balance is $37,842. How many days on average does it take the firm to collect its accounts receivable?

What is the required rate of return on equity : The firm plans to increase the dividend by 6.7 percent per year indefinitely. What is the required rate of return on equity?

Use severity limitations to reduce their risk exposure : What is risk pooling? How can insurers use severity limitations to reduce their risk exposure?

User Account

All Pages