- Using A Discount Rate Of 8 Per Year Give The Journal Entries That Owens Corporation Would Make On July 1 2013 Decemb 1 (210.56 KiB) Viewed 36 times
Using a discount rate of 8% per year, give the journal entries that Owens Corporation would make on July 1, 2013, Decemb
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Using a discount rate of 8% per year, give the journal entries that Owens Corporation would make on July 1, 2013, Decemb
Using a discount rate of 8% per year, give the journal entriesthat Owens Corporation would make on July 1, 2013, December 31,2013, and June 30, 2014, to account for the purchase commitment andthe forward contract. Owens Corporation’s accounting period is thecalendar year.
Accounting for forward currency contract as a fair value hedge and a cash flow hedge. On July 1, 2013, Owens Corporation places an order with a European supplier for manufactur- ing equipment for delivery on June 30, 2014. The purchase is denominated in euros in the amount of €60,000. Owens Corporation purchases a forward currency contract on July 1, 2013, for the purchase of €60,000 at a forward exchange rate for settlement on June 30, 2014, of €1 = $1.32. Owens Corporation designates the forward contract as a fair value hedge. The forward exchange rate on December 31, 2013, for settlement on June 30, 2014, is €1 = $1.35, and the actual exchange rate on June 30, 2014, is €1 = $1.40. The following summarizes this information: Date July 1, 2013..... December 31, 2013.. June 30, 2014.. Type of Exchange Rate Forward for June 30, 2014, Settlement Forward for June 30, 2014, Settlement Actual Exchange Rate €1 = $1.32 $1= €1.35 €1 = $1.40 Amount in Euros €60,000 €60,000 €60,000 Equivalent U.S. Dollar Amount $79,200 $81,000 $84,000 a. Using a discount rate of 8% per year, give the journal entries that Owens Corporation would make on July 1, 2013, December 31, 2013, and June 30, 2014, to account for the purchase commitment and the forward contract. Owens Corporation's accounting period is the calendar year.
Accounting for forward currency contract as a fair value hedge and a cash flow hedge. On July 1, 2013, Owens Corporation places an order with a European supplier for manufactur- ing equipment for delivery on June 30, 2014. The purchase is denominated in euros in the amount of €60,000. Owens Corporation purchases a forward currency contract on July 1, 2013, for the purchase of €60,000 at a forward exchange rate for settlement on June 30, 2014, of €1 = $1.32. Owens Corporation designates the forward contract as a fair value hedge. The forward exchange rate on December 31, 2013, for settlement on June 30, 2014, is €1 = $1.35, and the actual exchange rate on June 30, 2014, is €1 = $1.40. The following summarizes this information: Date July 1, 2013..... December 31, 2013.. June 30, 2014.. Type of Exchange Rate Forward for June 30, 2014, Settlement Forward for June 30, 2014, Settlement Actual Exchange Rate €1 = $1.32 $1= €1.35 €1 = $1.40 Amount in Euros €60,000 €60,000 €60,000 Equivalent U.S. Dollar Amount $79,200 $81,000 $84,000 a. Using a discount rate of 8% per year, give the journal entries that Owens Corporation would make on July 1, 2013, December 31, 2013, and June 30, 2014, to account for the purchase commitment and the forward contract. Owens Corporation's accounting period is the calendar year.