On December 1, 2016, Mosby, a U.S. company, sells goods to a German company, with...
60.1K
Verified Solution
Link Copied!
Question
Accounting
On December 1, 2016, Mosby, a U.S. company, sells goods to a German company, with payment of 300,000 euros to be received on March 1,2017 . Mosby also enters into a forward contract on December 1, 2016 to sell 300,000 euros on March 1, 2017. Exchange rates for the euro on various dates are as follows: Assuming that Mosby designates the forward contract as a fair value hedge of a foreign currency receivable, what is the net impact on its net income in 2016 resulting solely from the fluctuation in the value of Euro? Mosby amortizes forward points on a monthly basis using a straight-line method. $2,000 decrease in net income. $12,000 increase in net income. $3,000 decrease in net income. $1,500 decrease in net income
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
On December 1, 2016, Mosby, a U.S. company, sells goods to a German company, with payment of 300,000 euros to be received on March 1,2017 . Mosby also enters into a forward contract on December 1, 2016 to sell 300,000 euros on March 1, 2017. Exchange rates for the euro on various dates are as follows: Assuming that Mosby designates the forward contract as a fair value hedge of a foreign currency receivable, what is the net impact on its net income in 2016 resulting solely from the fluctuation in the value of Euro? Mosby amortizes forward points on a monthly basis using a straight-line method. $2,000 decrease in net income. $12,000 increase in net income. $3,000 decrease in net income. $1,500 decrease in net income 