Reference no: EM131658413

Critical Thinking Assignment

Journal Entries for Hedging a Forecasted Foreign Currency Transaction: A Foreign Currency Cash Value Hedge

Information:

1). Push Corp operates in the United States. It uses the Euro for local currency transactions.

2). On Oct 01, 20x7, Push Corp orders inventory items from German Corporation.

3). Within 30 days, the delivery of the German inventory parts will take place, Nov 1, 20x7.

4). The contract price is Euro 5,000 to be paid in 180 days, 6 months.

5). On Oct 01, 20x7, Push Corp hedges its foreign currency payable commitment with a forward exchange contract to receive Euro 5,000 in 210 days (30+180).

6). The purchase of inventory is forecasted for Nov 20x7, but this is not a binding agreement.

7). Relevant exchange Rates.

Attachment:- Critical-Thinking-Assignment.rar