On December 1, 2017, Ringling Company (a U.S.-based company) entered into a three-month forward contract...
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On December 1, 2017, Ringling Company (a U.S.-based company) entered into a three-month forward contract to purchase 1,200,000 pesos on March 1, 2018. The following U.S. dollar per peso exchange rates apply: Date December 1, 2017 December 31, 2017 March 1, 2018 Spot Rate $0.043 0.045 0.049 Forward Rate (to March 1, 2018) $0.046 0.048 N/A Ringling's incremental borrowing rate is 5 percent. The present value factor for two months at an annual interest rate of 5 percent (1 percent per month) is 0.9917 Which of the following correctly describes the manner in which Ringling Company will report the forward contract on its December 31, 2017, balance sheet? Multiple Choice Multiple Choice As an asset in the amount of $2,380. As an asset in the amount of $3,570 () As a liability in the amount of $190. As a liability in the amount of $3,570
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