On March 1,20X2,McBride Ltd.issued a purchase order to Tao Heavy Machines (Singapore)Inc.to acquire a drilling machine for $400,000 SGD.On the same day,McBride entered into a forward contract to receive $400,000 SGD on July 31,20X2.The machine was delivered on June 1,20X2 and payment was made July 31,20X2.McBride has an April 30 year-end.The following information has been provided:

Assume that the transaction qualifies as a cash-flow hedge.What is the net exchange gain (loss)that McBride should recognize in the period from May 1-July 31,20X2?
A)$(2,200)
B)$(1,800)
C)$ 0
D)$400

Question

On March 1,20X2,McBride Ltd.issued a purchase order to Tao Heavy Machines (Singapore) Inc.to acquire a drilling machine for $400,000 SGD.On the same day,McBride entered into a forward contract to receive $400,000 SGD on July 31,20X2.The machine was delivered on June 1,20X2 and payment was made July 31,20X2.McBride has an April 30 year-end.The following information has been provided:

Assume that the transaction qualifies as a cash-flow hedge.What is the net exchange gain (loss) that McBride should recognize in the period from May 1-July 31,20X2?

Assume that the transaction qualifies as a cash-flow hedge.What is the net exchange gain (loss)that McBride should recognize in the period from May 1-July 31,20X2?
A)$(2,200) 
B)$(1,800) 
C)$ 0 
D)$400

Quizplus · Accepted Answer

The Answer of On March 1,20X2,McBride Ltd.issued a purchase order to Tao Heavy Machines (Singapore)Inc.to acquire a drilling machine for $400,000 SGD.On the same day,McBride entered into a forward contract to receive $400,000 SGD on July 31,20X2.The machine was delivered on June 1,20X2 and payment was made July 31,20X2.McBride has an April 30 year-end.The following information has been provided:

Assume that the transaction qualifies as a cash-flow hedge.What is the net exchange gain (loss)that McBride should recognize in the period from May 1-July 31,20X2?
A)$(2,200) 
B)$(1,800) 
C)$ 0 
D)$400