Deck 9: Foreign Currency Transactions and Hedging Foreign Exchange Risk

Question 1

A spot rate may be defined as

A) The price a foreign currency can be purchased or sold today.
B) The price today at which a foreign currency can be purchased or sold in the future.
C) The forecasted future value of a foreign currency.
D) The U.S. dollar value of a foreign currency.
E) The Euro value of a foreign currency.

Answer 1

A

Question 2

Assuming a forward contract was entered into, the foreign currency was originally sold in the foreign currency market on December 16, 2018 at a

A) Forward contract discount $ 600.
B) Forward contract premium $ 600.
C) Forward contract discount $ 980.
D) Forward discount premium $ 980.
E) There is no premium or discount because the fair value of the contract is zero.

Answer 2

B

Question 3

Meisner Co.ordered parts costing §100,000 for a foreign supplier on May 12 when the spot rate was $.24 per stickle.A one-month forward contract was signed on that date to purchase §100,000 at a forward rate of $.25 per stickle.On June 12, when the parts were received and payment was made, the spot rate was $.28 per stickle.At what amount should inventory be reported?

A) $ 0.
B) $28,000.
C) $24,000.
D) $25,000.
E) $ 2,000.

Answer 3

B

Question 4

Mills Inc.had a receivable from a foreign customer that is due in the local currency of the customer (stickles).On December 31, 2018, this receivable for §200,000 was correctly included in Mills' balance sheet at $132,000.When the receivable was collected on February 15, 2019, the U.S.dollar equivalent was $144,000.In Mills' 2019 consolidated income statement, how much should have been reported as a foreign exchange gain?

A) $ 0.
B) $36,000.
C) $48,000.
D) $10,000.
E) $12,000.

Question 5

How much Foreign Exchange Gain or Loss should Brisco record on May 31?

A) $2,520,000 gain.
B) $ 20,000 gain.
C) $ 20,000 loss.
D) $ 80,000 gain.
E) $ 80,000 loss.

Question 6

For what amount should Brisco's Accounts Payable be credited on May 8?

A) $2,500,000.
B) $2,440,000.
C) $1,600,000.
D) $1,639,344.
E) $1,666,667.

Question 7

On June 1, CamCo received a signed agreement to sell inventory for ¥500,000.The sale would take place in 90 days.CamCo immediately signed a 90-day forward contract to sell the yen as soon as they are received.The spot rate on June 1 was ¥1 =$.004167, and the 90-day forward rate was ¥1 = $.00427.At what amount would CamCo record the Forward Contract on June 1?

A) $2,083.
B) $ 0.
C) $2,110.
D) $2,532.
E) $2,135.

Question 8

Assuming a forward contract was entered into on December 16, how would the forward contract be reflected on Car's December 31, 2018 balance sheet?

A) Forward contract (asset).
B) Forward contract (liability).
C) Foreign currency (asset).
D) Foreign currency (liability).
E) Foreign exchange (liability)

Question 9

What amount of foreign exchange gain or loss should be recorded on January 30?

A) $1,516 gain.
B) $1,516 loss.
C) $575 loss.
D) $500 loss.
E) $500 gain.

Question 10

What amount of foreign exchange gain or loss should be recorded on December 31?

A) $300 gain.
B) $300 loss.
C) $ 0.
D) $941 loss.
E) $941 gain.

Question 11

For what amount should Sales be credited on December 1?

A) $ 5,500.
B) $16,949.
C) $18,182.
D) $17,241.
E) $16,667.

Question 12

Assuming a forward contract was entered into on December 16, what would be the net impact on Car Corp.'s 2018 income statement related to this transaction? Assume an annual interest rate of 12% and a fair value hedge.The present value for one half-month at 12% is .9950.

A) $ 700 (gain).
B) $ 700 (loss).
C) $ 995 (gain).
D) $ 300 (loss).
E) $ 298 (gain).

Question 13

Assuming a forward contract was not entered into, what would be the net impact on Car Corp.'s 2018 income statement related to this transaction?

A) $ 500 (gain).
B) $ 500 (loss).
C) $ 200 (gain).
D) $ 200 (loss).
E) $ - 0 -

Question 14

Assuming a forward contract was entered into on December 16, at what amount should the forward contract be recorded at December 31, 2018? Assume an annual interest rate of 12% and a fair value hedge.The present value for one month at 12% is .9901.

A) $ 200.
B) $ 295.
C) $ 495.
D) $ 500.
E) $ 9,300.

Question 15

Which statement is true regarding a foreign currency option?

A) A foreign currency option gives the holder the obligation to buy or sell foreign currency in the future.
B) A foreign currency option gives the holder the obligation to only sell foreign currency in the future.
C) A foreign currency option gives the holder the obligation to only buy foreign currency in the future.
D) A foreign currency option gives the holder the right but not the obligation to buy or sell foreign currency in the future.
E) A foreign currency option gives the holder the obligation to buy or sell foreign currency in the future at the spot rate on the future date.

Question 16

Belsen purchased inventory on December 1, 2017.Payment of 200,000 stickles was to be made in sixty days.Also on December 1, Belsen signed a contract to purchase §200,000 in sixty days.The spot rate was §1 = .35714, and the 60-day forward rate was §1 = $.38462.On December 31, the spot rate was §1 = .34483 and the 30-day forward rate was §1 = .38168.Assume an annual interest rate of 12% and a fair value hedge.The present value for one month at 12% is .9901. In the journal entry to record the establishment of a forward exchange contract, at what amount should the Forward Contract account be recorded on December 1?

A) $71,428.
B) $76,924.
C) $ 588.
D) $ 582.
E) $ 0, since there is no cost, there is no value for the contract at this date.

Question 17

The forward rate may be defined as

A) The price a foreign currency can be purchased or sold today.
B) The price today at which a foreign currency can be purchased or sold in the future.
C) The forecasted future value of a foreign currency.
D) The U.S. dollar value of a foreign currency.
E) The Euro value of a foreign currency.

Question 18

Assuming a forward contract was entered into on December 16, what would be the net impact on Car Corp.'s 2019 income statement related to this transaction?

A) $ 500 (gain).
B) $ 500 (loss).
C) $ 300 (gain).
D) $ 300 (loss).
E) $0.

Question 19

Pigskin Co., a U.S.corporation, sold inventory on credit to a British company on April 8, 2018.Pigskin received payment of 35,000 British pounds on May 8, 2018.The exchange rate was £1 = $1.54 on April 8 and £1 = 1.43 on May 8.What amount of foreign exchange gain or loss should be recognized? (round to the nearest dollar)

A) $10,500 loss
B) $10,500 gain
C) $ 1,750 loss
D) $ 3,850 loss
E) No gain or loss should be recognized.

Question 20

How much US $ will it cost Brisco to finally pay the payable on June 7?

A) $1,666,667.
B) $2,440,000.
C) $2,520,000.
D) $2,500,000.
E) $2,400,000.

Question 21

Which of the following approaches is used in the United States in accounting for foreign currency transactions?

A) One-transaction perspective; defer foreign exchange gains and losses.
B) Two-transaction perspective; accrue foreign exchange gains and losses.
C) Three-transaction perspective; defer foreign exchange gains and losses.
D) One-transaction perspective; accrue foreign exchange gains and losses.
E) Two-transaction perspective; defer foreign exchange gains and losses.

Question 22

A U.S.company sells merchandise to a foreign company denominated in U.S.dollars.Which of the following statements is true?

A) If the foreign currency appreciates, a foreign exchange gain will result.
B) If the foreign currency depreciates, a foreign exchange gain will result.
C) No foreign exchange gain or loss will result.
D) If the foreign currency appreciates, a foreign exchange loss will result.
E) If the foreign currency depreciates, a foreign exchange loss will result.

Question 23

Compute the U.S.dollars received on February 1, 2019.

A) $138,000.
B) $136,500.
C) $145,500.
D) $141,000
E) $142,500.

Question 24

How much foreign exchange gain or loss should be included in Shannon's 2018 income statement?

A) $1,000 gain.
B) $1,000 loss.
C) $2,000 gain.
D) $2,000 loss.
E) $8,000 loss.

Question 25

A forward contract may be used for which of the following? 1) A fair value hedge of an asset.
2) A cash flow hedge of an asset.
3) A fair value hedge of a liability.
4) A cash flow hedge of a liability.

A) 1 and 3
B) 2 and 4
C) 1 and 2
D) 1, 3, and 4
E) 1, 2, 3, and 4

Question 26

Angela, Inc., a U.S.company, had a euro receivable from exports to Spain and a British pound payable resulting from imports from England.Angela recorded foreign exchange gain related to both its euro receivable and pound payable.Did the foreign currencies increase or decrease in dollar value from the date of the transaction to the settlement date?

Question 27

A U.S.company buys merchandise from a foreign company denominated in the foreign currency.Which of the following statements is true?

A) If the foreign currency appreciates, a foreign exchange gain will result.
B) If the foreign currency depreciates, a foreign exchange loss will result.
C) No foreign exchange gain or loss will result.
D) If the foreign currency appreciates, a foreign exchange loss will result.
E) Any gain or loss will be included in comprehensive income.

Question 28

When a U.S.company purchases parts from a foreign company, which of the following will result in zero foreign exchange gain or loss?

A) The transaction is denominated in U.S. dollars.
B) The option strike price to sell foreign currency is less than the spot rate of the currency.
C) The option strike price to buy foreign currency is less than the spot rate of the currency.
D) The foreign currency appreciated in value relative to the U.S. dollar.
E) The foreign currency depreciated in value relative to the U.S. dollar.

Question 29

How much foreign exchange gain or loss should be included in Shannon's 2017 income statement?

A) $3,000 gain.
B) $3,000 loss.
C) $6,000 gain.
D) $6,000 loss.
E) $7,000 gain.

Question 30

A U.S.company sells merchandise to a foreign company denominated in the foreign currency.Which of the following statements is true?

A) If the foreign currency appreciates, a foreign exchange gain will result.
B) If the foreign currency depreciates, a foreign exchange gain will result.
C) No foreign exchange gain or loss will result.
D) If the foreign currency appreciates, a foreign exchange loss will result.
E) Any gain or loss will be included in comprehensive income.

Question 31

A company has a discount on a forward contract for a foreign currency denominated asset.How is the discount recognized over the life of the contract under fair value hedge accounting?

A) As a debit to discount expense.
B) As a debit to amortization expense.
C) As a debit to accumulated other comprehensive income.
D) As a debit impact on net income, as a result of the hedge.
E) As a decreases to sales.

Question 32

Compute the fair value of the foreign currency option at December 1, 2018.

A) $6,000.
B) $4,500.
C) $3,000.
D) $7,500.
E) $1,500.

Question 33

Which of the following statements is true concerning hedge accounting?

A) Hedges of foreign currency firm commitments are used for future sales only.
B) Hedges of foreign currency firm commitments are used for future purchases only.
C) Hedges of foreign currency firm commitments are used for current sales or purchases.
D) Hedges of foreign currency firm commitments are used for future sales or purchases.
E) Hedges of foreign currency firm commitments are entered into for speculative purposes.

Question 34

U.S.GAAP provides guidance for hedges of all the following sources of foreign exchange risk except

A) Recognized foreign currency denominated assets and liabilities.
B) Unrecognized foreign currency firm commitments.
C) Forecasted foreign currency denominated transactions.
D) Net investment in foreign operations.
E) Deferred foreign currency gains and losses.

Question 35

Alpha, Inc., a U.S.company, had a receivable from a customer that was denominated in Mexican pesos.On December 31, 2017, this receivable for 75,000 pesos was correctly included in Alpha's balance sheet at $8,000.The receivable was collected on March 2, 2018, when the U.S.equivalent was $6,900.How much foreign exchange gain or loss will Alpha record on the income statement for the year ended December 31, 2018?

A) $1,100 loss.
B) $1,100 gain.
C) $6,900 loss.
D) $6,900 gain.
E) $8,000 gain.

Question 36

A U.S.company buys merchandise from a foreign company denominated in U.S.dollars.Which of the following statements is true?

A) If the foreign currency appreciates, a foreign exchange gain will result.
B) If the foreign currency depreciates, a foreign exchange gain will result.
C) No foreign exchange gain or loss will result.
D) If the foreign currency appreciates, a foreign exchange loss will result.
E) Any gain or loss will be included in comprehensive income.

Question 37

Compute the fair value of the foreign currency option at February 1, 2019.

A) $6,000.
B) $4,500.
C) $3,000.
D) $7,500.
E) $1,500.

Question 38

Compute the fair value of the foreign currency option at December 31, 2018.

A) $6,000.
B) $4,500.
C) $3,000.
D) $7,500.
E) $1,500.

Question 39

All of the following data may be needed to determine the fair value of a forward contract at any point in time except

A) The forward rate when the forward contract was entered into.
B) The current forward rate for a contract that matures on the same date as the forward contract entered into.
C) The future spot rate.
D) A discount rate.
E) The company's incremental borrowing rate.

Question 40

All of the following hedges are used for future purchase/sale transactions except

A) Forward contracts used as a fair value hedge of a firm commitment.
B) Options used as a fair value hedge of a firm commitment.
C) Option contract cash flow hedge of a forecasted transaction.
D) Forward contract cash flow hedges of a forecasted transaction.
E) Forward contracts used to hedge a foreign currency denominated liability.

Question 41

What was the impact on Mosby's 2019 net income as a result of this fair value hedge of a firm commitment?

A) $ 1,800.00 decrease.
B) $ 2,500.00 increase.
C) $ 2,500.00 decrease.
D) $188,760.60 increase.
E) $188,760.60 decrease.

Question 42

What was the net increase or decrease in cash flow from having purchased the foreign currency option to hedge this exposure to foreign exchange risk?

A) $0
B) $10,000 increase.
C) $10,000 decrease.
D) $20,000 increase.
E) $20,000 decrease.

Question 43

Frankfurter Company, a U.S.company, had a ruble receivable from exports to Russia and a euro payable resulting from imports from Italy.Frankfurter recorded foreign exchange loss related to both its ruble receivable and euro payable.Did the foreign currencies increase or decrease in dollar value from the date of the transaction to the settlement date?

Question 44

Lawrence Company, a U.S.company, ordered parts costing 1,000,000 Thailand bahts from a foreign supplier on July 7 when the spot rate was $.025 per baht.A one-month forward contract was signed on that date to purchase 1,000,000 bahts at a rate of $.027.The forward contract is properly designated as a fair value hedge of the 1,000,000 baht firm commitment.On August 7, when the parts are received, the spot rate is $.028.What is the amount of accounts payable that will be paid at this date?

A) $20,000.
B) $20,100.
C) $25,000.
D) $27,000.
E) $28,000.

Question 45

What was the impact on Mosby's 2018 net income as a result of this fair value hedge of a firm commitment?

A) $1,760.60 decrease.
B) $1,960.60 decrease.
C) $1,000.00 decrease.
D) $1,760.60 increase.
E) $1,960.60 increase.

Question 46

What amount should be included as a foreign exchange gain or loss from the two transactions for 2019?

A) $1,000 loss.
B) $1,000 gain.
C) $2,000 loss.
D) $4,000 gain.
E) $4,000 loss.

Question 47

What amount will Woolsey include as an option expense in net income for the period July 24 to October 24?

A) $ 4,000.
B) $ 5,000.
C) $10,000.
D) $12,000.
E) $14,000.

Question 48

What amount should be included as a foreign exchange gain or loss from the two transactions for 2018?

A) $ 2,000 loss.
B) $ 2,000 gain.
C) $10,000 gain.
D) $14,000 loss.
E) $ 14,000 gain.

Question 49

On April 1, Quality Corporation, a U.S.company, expects to sell merchandise to a French customer in three months, denominating the transaction in euros.On April 1, the spot rate is $1.41 per euro, and Quality enters into a three-month forward contract cash flow hedge to sell 400,000 euros at a rate of $1.36.At the end of three months, the spot rate is $1.37 per euro, and Quality delivers the merchandise, collecting 400,000 euros.What are the effects on net income from these transactions?

A) $20,000 Discount Expense plus a $12,000 positive Adjustment to Net Income when the merchandise is delivered.
B) $20,000 Discount Expense plus a $12,000 negative Adjustment to Net Income when the merchandise is delivered.
C) $20,000 Discount Expense plus a $20,000 negative Adjustment to Net Income when the merchandise is delivered.
D) $20,000 Discount Expense plus a $16,000 positive Adjustment to Net Income when the merchandise is delivered.
E) $20,000 Discount Expense plus a $20,000 positive Adjustment to Net Income when the merchandise is delivered.

Question 50

What was the overall result of having entered into this hedge of exposure to foreign exchange risk?

A) $0
B) $9,000 net loss on the option.
C) $9,000 net gain on the option.
D) $2,000 net gain on the option.
E) $2,000 net loss.

Question 51

What amount should be included as a foreign exchange gain or loss from the two transactions for 2019?

A) $ 9,000 loss.
B) $ 9,000 gain.
C) $11,000 loss.
D) $21,000 loss.
E) $21,000 gain.

Question 52

What was the net impact on Mattie's 2019 income including the fair value hedge of a firm commitment?

A) $379,760.60 decrease.
B) $ 8,360.60 increase.
C) $ 8,360.60 decrease.
D) $ 4,390.40 decrease.
E) $379,760.60 increase.

Question 53

Atherton, Inc., a U.S.company, expects to order goods from a foreign supplier at a price of 100,000 lira, with delivery and payment to be made on April 17.On January 17, Atherton purchased a three-month call option on 100,000 lira and designated this option as a cash flow hedge of a forecasted foreign currency transaction.The following exchange rates apply: Option Strike Price $ 4.34
Option Cost $5,000
January 17 Spot Rate $ 4.34
April 17 Spot Rate $ 4.26
What amount will Atherton include as an option expense in net income for the period January 17 to April 17?

A) $4,000
B) $4,260
C) $4,340
D) $5,000
E) $5,260

Question 54

Primo Inc., a U.S.company, ordered parts costing 100,000 rupee from a foreign supplier on July 7 when the spot rate was $.025 per rupee.A one-month forward contract was signed on that date to purchase 100,000 rupee at a rate of $.027.The forward contract is properly designated as a fair value hedge of the 100,000 rupee firm commitment.On August 7, when the parts are received, the spot rate is $.028.At what amount should the payable be carried on Primo's books?

A) $2,000.
B) $2,100.
C) $2,500.
D) $2,700.
E) $2,800.

Question 55

Larson Company, a U.S.company, has an India rupee account receivable resulting from an export sale on September 7 to a customer in India.Larson signed a forward contract on September 7 to sell rupees and designated it as a cash flow hedge of a recognized receivable.The spot rate was $.023, and the forward rate was $.021.Which of the following did the U.S.exporter report in net income?

A) Discount revenue.
B) Premium revenue.
C) Discount expense.
D) Premium expense.
E) Both discount revenue and premium expense.

Question 56

What amount should be included as a foreign exchange gain or loss from the two transactions for 2018?

A) $ 9,000 loss.
B) $ 9,000 gain.
C) $11,000 loss.
D) $13,000 gain.
E) $ 14,000 gain.

Question 57

What amount will Woolsey include as Adjustment to Net Income for the period ended October 31?

A) $ 6,000 positive.
B) $ 6,000 negative.
C) $10,000 positive.
D) $10,000 negative.
E) $14,000 positive.

Question 58

What was the net impact on Mattie's 2018 income as a result of this fair value hedge of a firm commitment?

A) $1,800.00 decrease.
B) $1,760.60 decrease.
C) $2,240.40 decrease.
D) $1,660.40 increase.
E) $2,240.60 increase.

Question 59

On December 1, 2018, Joseph Company, a U.S.company, entered into a three-month forward contract to purchase 50,000 pesos on March 1, 2019, as a fair value hedge of a foreign currency denominated account payable.The following U.S.dollar per peso exchange rates apply: Joseph's incremental borrowing rate is 12 percent.The present value factor for two months at an annual interest rate of 12 percent is .9803.Which of the following is included in Joseph's December 31, 2018 balance sheet for the forward contract?

A) $5,146.58 asset.
B) $5,146.58 liability.
C) $ 500.00 liability.
D) $ 490.15 asset.
E) $ 490.15 liability.

Question 60

Williams, Inc., a U.S.company, has a Japanese yen account receivable resulting from an export sale on March 1 to a customer in Japan.The exporter signed a forward contract on March 1 to sell yen and designated it as a cash flow hedge of a recognized receivable.The spot rate was $.0094, and the forward rate was $.0095.Which of the following did the U.S.exporter report in net income?

A) Discount revenue.
B) Premium revenue.
C) Discount expense.
D) Premium expense.
E) Both discount revenue and premium expense.

Question 61

All of the following data points are needed to determine the fair value of a forward contract (at any point), EXCEPT

A) The forward rate when the forward contract was entered into.
B) The current forward rate for a contract that matures on the same date as the forward contract entered into.
C) The forward rate for a contract that has the same duration as the forward contract entered into.
D) A discount rate which is typically the company's incremental borrowing rate.
E) A future rate which is typically the company's incremental borrowing rate.

Question 62

For speculative derivatives, the change in the fair value of the derivative must be:

A) Utilized to adjust the derivative asset.
B) Recognized immediately as a gain or loss in net income.
C) Recognized as a loss in other comprehensive income.
D) Recognized as a gain in other comprehensive income.
E) Recognized as a gain or loss in net income at a later date.

Question 63

How is the fair value of a Forward Contract determined by U.S.GAAP?

Question 64

What is the purpose of a hedge of foreign exchange risk?

Question 65

What is the amount of option expense for 2019 from these transactions?

A) $1,000.
B) $1,600.
C) $2,500.
D) $2,600.
E) $ 0.

Question 66

How does a foreign currency forward contract differ from a foreign currency option?

Question 67

Authoritative literature provides guidance for hedges of the following sources of foreign exchange risk. I.Recognized foreign currency denominated assets and liabilities.
II)Unrecognized foreign currency firm commitments.
III)Forecasted foreign currency denominated transactions.

A) I only
B) I and II
C) II only
D) II and III
E) I, II, and III

Question 68

What is the amount of Cost of Goods Sold for 2019 as a result of these transactions?

A) $200,000.
B) $195,000.
C) $201,000.
D) $202,600.
E) $203,000.

Question 69

What journal entry should Eagle prepare on October 1, 2018?

Question 70

What journal entry should Eagle prepare on December 31, 2018?

Question 71

Which is a true statement regarding the fundamental requirement of accounting for derivatives?

A) Derivatives are reported on the balance sheet only as an asset.
B) Derivatives are reported on the balance sheet only as a liability.
C) Changes in derivative cost basis are recorded in the asset value.
D) Changes in derivative fair value are included in comprehensive income.
E) Changes in derivative cost basis are recorded in the liability value.

Question 72

Yelton Co.just sold inventory for 80,000 euros, which Yelton will collect in sixty days.Briefly describe a hedging transaction Yelton could engage in to reduce its risk of unfavorable exchange rates.

Question 73

To account for a forward contract cash flow hedge of a foreign currency denominated asset or liability at initiation date requires which of the following?

A) 1. Recognize the transaction (sale or purchase) and foreign currency denominated asset or liability 2. Recognize option as an asset (purchase price is fair value)
B) 1. No entry related to the firm commitment (zero value) 2. No entry related to forward contract (zero fair value)
C) 1. Recognize the transaction (sale or purchase) and foreign currency denominated asset or liability 2. No entry related to forward contract (zero fair value)
D) 1. Recognize the transaction (sale or purchase) 2. Recognize the option as a liability
E) 1. None. No journal entry is required.

Question 74

What is the amount of Adjustment to Accumulated Other Comprehensive Income for 2019 from these transactions?

A) $1,000.
B) $1,600.
C) $1,800.
D) $2,000.
E) $2,600.

Question 75

What are the two separate transactions that require recording under the two-transaction perspective?

Question 76

What is the 2019 effect on net income as a result of these transactions?

A) $195,000
B) $201,600
C) $201,000
D) $202,600
E) $203,000

Question 77

Which of the following is not a condition of accounting for hedge derivatives?

A) The derivative is minimally effective in offsetting changes in the cash flows or fair value related to the hedged item.
B) The derivative is properly documented as a hedge.
C) The derivative is used to hedge a cash flow exposure to foreign exchange risk.
D) The derivative is highly effective in offsetting changes in the cash flows or fair value related to the hedged item.
E) The derivative is used to hedge a fair value exposure to foreign exchange risk.

Question 78

What is meant by the spot rate?

Question 79

To account for a forward contract cash flow hedge of a foreign currency denominated asset or liability at the balance sheet date

A) 1. Adjust hedged asset or liability to fair value, with counterpart (change in fair value) reported as foreign exchange gain or loss in net income, 2. Adjust forward contract to fair value (either an asset or a liability), with counterpart (change in fair value) reported in AOCI, 3. Transfer an amount from AOCI to net income to offset the foreign exchange gain or loss on the hedged asset or liability recognized in 1, and 4. Transfer from AOCI to net income (as discount expense or premium revenue) the current period's amortization of discount or premium
B) 1. Adjust hedged asset or liability to fair value, with counterpart (change in fair value) reported as foreign exchange gain or loss in net income and 2. Adjust option to fair value (either an asset or zero value), with counterpart (change in fair value) reported as gain or loss in net income
C) 1. Adjust forward contract to fair value (either an asset or a liability), with counterpart (change in fair value) reported as gain or loss in net income and 2. Adjust firm commitment to fair value (based on change in forward rate), with counterpart (change in fair value) reported as gain or loss in net income
D) 1. Adjust hedged asset, with counterpart (change in fair value) reported as a foreign exchange gain in net income and 2. Adjust forward contract to fair value (either an asset or a liability), with counterpart (change in fair value) reported as a gain or loss in net income
E) 1. None. No journal entry is required.

Question 80

Where can you find exchange rates between the U.S.dollar and most foreign currencies?