What is the value of the Forward Contract Receivable-FC

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Reference no: EM132837133

Question - On 6/1/20x4, a Philippine firm purchased an inventory costing 100,000 foreign currency units (FCU) from a foreign firm to be paid on 8/1/20x4. Also on 6/1/20x4, the Philippine firm entered into a forward contract to purchase 100,000 FCUs for delivery on 8/1/20x4. The exchange rates were as follows:

Date Spot rate Forward rate

6/1/20x4 1 FCU = P0.73 1 FCU = P0.74

6/30/20x4 1 FCU = P0.70 1 FCU = P0.75

8/1/20x4 1 FCU = P0.68 1 FCU = P0.68

The Philippine firm's fiscal year end is 6/30/20x4. The changes in the value of the forward contract should be discounted at 8%.

Required -

1. What is the value of the Forward Contract Receivable-FC on 6/1/20x4?

2. What is the value of the Forward Contract Receivable-FC on 6/30/20x4?

Reference no: EM132837133

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