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    Hedging An Identifiable Commitment

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    yohanes
    The document summarizes a transaction between a US firm and a German firm where the US firm purchased equipment for DM 1,000,000 on January 19x4. It was due to be paid on January 19x5. The spot rate on the purchase date was $0.52 per DM and the forward rate for the contract was $0.54 per DM. The exchange rate on December 31, 19x4 was $0.53 per DM. The summary shows the accounting entries for both firms on the transaction date, reporting date, and settlement date based on the exchange rates.

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    Hedging An Identifiable Commitment

    Uploaded by

    yohanes
    35 views2 pages
    The document summarizes a transaction between a US firm and a German firm where the US firm purchased equipment for DM 1,000,000 on January 19x4. It was due to be paid on January 19x5. The spot rate on the purchase date was $0.52 per DM and the forward rate for the contract was $0.54 per DM. The exchange rate on December 31, 19x4 was $0.53 per DM. The summary shows the accounting entries for both firms on the transaction date, reporting date, and settlement date based on the exchange rates.

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    Hedging an Identifiable Commitment

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    The document summarizes a transaction between a US firm and a German firm where the US firm purchased equipment for DM 1,000,000 on January 19x4. It was due to be paid on January 19x5. The spot rate on the purchase date was $0.52 per DM and the forward rate for the contract was $0.54 per DM. The exchange rate on December 31, 19x4 was $0.53 per DM. The summary shows the accounting entries for both firms on the transaction date, reporting date, and settlement date based on the exchange rates.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    35 views2 pages

    Hedging An Identifiable Commitment

    Uploaded by

    yohanes
    The document summarizes a transaction between a US firm and a German firm where the US firm purchased equipment for DM 1,000,000 on January 19x4. It was due to be paid on January 19x5. The spot rate on the purchase date was $0.52 per DM and the forward rate for the contract was $0.54 per DM. The exchange rate on December 31, 19x4 was $0.53 per DM. The summary shows the accounting entries for both firms on the transaction date, reporting date, and settlement date based on the exchange rates.

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    of 2

    Nama : Belthasar Trito Siahaan

    NIM : 157017036
    Tugas : Akuntansi Internasional

    HEDGING AN IDENTIFIABLE COMMITMENT

    US firm purchase a piece of equipment jan 19x4 from germany firm, and it cost DM
    1.000.000. the payment due is jan 19x5.

    Spot rate for DM 1 on jan 19x4 is $ 0,52


    Forward rate for DM 1 for the contract is $ 0,54
    Exchange rate for DM 1 on dec 31 19x4 is $ 0,53

    Answer:

    US firm account:

    Transaction day
    1 jan 19x4:
    Payable $ 520.000
    Equipment $ 520.000
    (DM 1.000.000 X $ 0,52)

    Report day
    31 dec 19x4:
    Payable $ 520.000
    Loss $ 10.000
    Equipment $ 530.000
    (DM 1.000.000 X $ 0,53)

    Settlement day
    1 jan 19x5:
    Payable $ 520.000
    Loss $ 20.000
    Cash $ 540.000
    (DM 1.000.000 X $ 0,54)
    Germany firm account:

    Transaction day
    1 jan 19x4
    Receivable $ 520.000
    Sales $ 520.000
    (DM 1.000.000 X $ 0,52)

    Report day
    31 dec 19x4
    Receivable $ 520.000
    Gain $ 10.000
    Sales $ 530.000
    (DM 1.000.000 X $ 0,53)
    Settlement day
    1 jan 19x5
    Cash $ 540.000
    Receivable $ 520.000
    Gain $ 20.000
    (DM 1.000.000 X $ 0,54)

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