60.1K

Verified Solution

Link Copied!

Please show rhe calculations as well, I am not very sure about the journal entries too.

On January 1, 2020, Crane Inc. agrees to buy 3 kg of gold at $ 35,000 per kilogram from Golden Corp on April 1, 2020, but does not intend to take delivery of the gold. On the day that the contract was entered into the fair value of this forward contract was zero. The fair value of the forward subsequently fluctuated as follows: Date Fair Value of Forward Contract January 20, 2020 $ 457 February 6, 2020 $ 129 February 28, 2020 $360 March 14, 2020 $ 860 On the settlement date, the spot price of gold is $ 36,000 per kilogram. Assume that Crane complies with IFRS. Prepare the journal entry for the day the forward contract was signed. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Date Account Titles and Explanation Debit Credit January 1, 2020 Derivatives - Financial Assets/Liabilities Cash Prepare the journal entries to recognize the changes in the fair value of the forward contract. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Crec January 20, 2020 Derivatives - Financial Assets/Liabilities Gain or Loss on Derivatives February 6, 2020 Loss on Redemption of Bonds Derivatives - Financial Assets/Liabilities February 28, 2020 Derivatives - Financial Assets/Liabilities March 14.2020 Derivatives - Financial Assets/Liabilities Prepare the journal entry that would be required if Crane settled the contract on a net basis on April 1, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit April 1, 2020

Answer & Explanation Solved by verified expert

See Answer