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    QUIZ C12 Acctg-Derivatives & Hedging2-OnLINE

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    Cheesy Mac
    A derivative is a financial instrument whose value changes in relation to changes in a variable, such as an interest rate, commodity price, credit rating, or foreign exchange rate

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    QUIZ C12 Acctg-Derivatives & Hedging2-OnLINE

    Uploaded by

    Cheesy Mac
    454 views3 pages
    A derivative is a financial instrument whose value changes in relation to changes in a variable, such as an interest rate, commodity price, credit rating, or foreign exchange rate

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    © © All Rights Reserved

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    PDF, TXT or read online from Scribd

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    A derivative is a financial instrument whose value changes in relation to changes in a variable, such as an interest rate, commodity price, credit rating, or foreign exchange rate

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    454 views3 pages

    QUIZ C12 Acctg-Derivatives & Hedging2-OnLINE

    Uploaded by

    Cheesy Mac
    A derivative is a financial instrument whose value changes in relation to changes in a variable, such as an interest rate, commodity price, credit rating, or foreign exchange rate

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    Page|1

    Chapter 12
    Accounting for Derivatives and Hedging Transactions (Part 2)
    NAME: Date:

    Professor: Section: Score:

    QUIZ:
    Use the following information for the next eight questions:
    On December 15, 20x1, ABC Co. sold goods to a Japanese firm for 4,000,000 yens. ABC Co. was
    concerned about the fluctuation in the Japanese yen, so on this date, ABC Co. entered into a 30-day
    forward contract to sell 4,000,000 yens for ₱1,880,000 to a bank at the forward rate of ₱0.47.

    Relevant rates are shown below:


    Dec. 15, 20x1 Dec. 31, 20x1 Jan. 15, 20x2
    Spot rate ₱0.48 ₱0.49 ₱0.46 Forward rate ₱0.47 ₱0.485 ₱0.46

    1. The entry to record the hedging instrument on December 15, 20x1 includes
    a. a debit to accounts receivable for ₱1,880,000
    b. a credit to sales for ₱1,880,000
    c. both a and b
    d. none

    2. How much is the FOREX gain (loss) on foreign currency transaction on December 31, 20x1?
    a. 40,000 b. (40,000) c. 60,0000 d. (60,000)

    3. How much is the gain (loss) on change in fair value of the derivative on December 31, 20x1?
    a. 40,000 b. (40,000) c. 60,0000 d. (60,000)

    4. The derivative asset (liability) to be included in the December 31, 20x1 statement of financial
    position is
    a. 1,960,000 b. (1,920,000) c. 60,0000 d. (60,000)

    5. How much is the FOREX gain (loss) on foreign currency transaction on January 15, 20x2?
    a. 120,000 b. (120,000) c. 100,0000 d. (100,000)

    6. How much is the gain (loss) on change in fair value of the derivative on January 15, 20x2?
    a. 120,000 b. (120,000) c. 100,0000 d. (100,000)

    7. If the forward contract is settled on a net cash basis, how much is the net cash settlement receipt
    (payment)?
    a. 40,000 b. (40,000) c. 100,000 d. 0
    8. The total net effect of the two contracts in 20x1 and 20x2 profit or loss is – gain (loss)
    a. 40,000 b. (40,000) c. 100,000 d. 0
    Page|2

    Use the following information for the next five questions:


    ABC Co. expects the value of yens to decrease in the next 30 days. Accordingly, on December 15,
    20x1, ABC Co. enters into a 30-day forward contract to sell 4,000,000 yens at the forward rate of
    ₱0.47. On December 31, 20x1, the forward rate was ₱0.485 and by January 15, 20x2, the spot rate
    moved to ₱0.46.

    9. The entry to record the forward contract on December 15, 20x1 includes
    a. a debit to forward contract for ₱60,000
    b. a credit to forward contract for ₱60,000
    c. a debit to loss on forward contract for ₱60,000
    d. none

    10. How much is the gain (loss) on change in fair value of the derivative on December 31, 20x1?
    a. 60,000 in profit or loss c. (60,0000) in OCI
    b. (40,000) in OCI d. (60,000) in profit or loss

    11. The derivative asset (liability) to be included in the December 31, 20x1 statement of financial
    position is
    a. 1,960,000 b. (1,920,000) c. 60,0000 d. (60,000)

    12. How much is the gain (loss) on change in fair value of the derivative on January 15, 20x2?
    a. 120,000 b. (120,000) c. 100,000 d. (100,000)

    13. How much is the net cash settlement receipt (payment) on January 15, 20x2?
    a. 40,000 b. (40,000) c. 1,840,000 d. (1,840,000)

    Use the following information for the next seven questions:


    On December 15, 20x1, ABC Co. purchased goods from a Korean firm for 40,000 wons. ABC Co. was
    concerned about the fluctuation in the Korean won, so on this date, ABC Co. entered into a 30-day
    forward contract to buy 40,000 wons for ₱49,600 from a bank at the forward rate of ₱1.24.

    Relevant rates are shown below:


    Dec. 15, 20x1 Dec. 31, 20x1 Jan. 15, 20x2
    Spot rate 1.20 1.26 1.30 Forward rate 1.24 1.27 1.30

    14. The purchased inventory shall be recognized at


    a. 48,000 b. 49,600 c. 50,400 d. 50,800

    15. The derivative asset (liability) to be included in the December 31, 20x1 statement of financial
    position is
    a. 2,400 b. (2,400) c. 1,200 d. (1,200)
    16. The adjustment to the inventory account on December 31, 20x1 is – increase
    (decrease) a. 2,400 b. (2,400) c. 1,200 d. 0
    Page|3

    17. How much is the FOREX gain (loss) on foreign currency transaction on January 15,
    20x2? a. (2,400) b. (1,600) c. 1,200 d. (1,200)

    18. How much is the gain (loss) on change in fair value of the derivative on January 15, 20x2?
    a. 1,200 b. (1,200) c. 1,600 d. (1,600)

    19. The total net effect of the two contracts on profit or loss in 20x2 is – gain (loss)
    a. (1,600) b. (400) c. 1,600 d. 0

    20. Assuming the forward contract is settled on a net cash basis, how much is the net cash
    settlement receipt (payment) on January 15, 20x2?
    a. 1,600 b. (400) c. 2,400 d. (2,400)

    “Do not be anxious about anything, but in everything by prayer and supplication with thanksgiving
    let your requests be made known to God. And the peace of God, which surpasses all
    understanding, will guard your hearts and your minds in Christ Jesus.” (Philippians 4:6-7)

    - END –

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