One orange juice futures contract is on 15,000 pounds of frozen concentrate. Suppose that in September 2014 a company se

Business, Finance, Economics, Accounting, Operations Management, Computer Science, Electrical Engineering, Mechanical Engineering, Civil Engineering, Chemical Engineering, Algebra, Precalculus, Statistics and Probabilty, Advanced Math, Physics, Chemistry, Biology, Nursing, Psychology, Certifications, Tests, Prep, and more.
Post Reply
answerhappygod
Site Admin
Posts: 899603
Joined: Mon Aug 02, 2021 8:13 am

One orange juice futures contract is on 15,000 pounds of frozen concentrate. Suppose that in September 2014 a company se

Post by answerhappygod »

One orange juice futures contract is on 15,000 pounds of frozen concentrate. Suppose that in September 2014 a company sells a March 2016 orange juice futures contract for 120 cents per pound. In December 2014, the futures price is 140 cents; in December 2015, it is 110 cents; and in February 2016, it is closed out at 125 cents. The company has a December year end. What is the companys profit or loss on the contract? How is it realized? What is the accounting and tax treatment of the transaction if the company is classified as (a) a hedger and (b) a speculator?
Join a community of subject matter experts. Register for FREE to view solutions, replies, and use search function. Request answer by replying!
Top
Post Reply

Return to “Archived Questions & Answers”