Vino Veritas Company, a U.S.-based importer of wines and spirits, placed an order with a French supplier for 1,200 cases of wine at a price of 230 euros per case. The total purchase price is 276,000 euros. Relevant exchange rates for the euro are as follows:
Date | Spot Rate |
Forward Rate to October 31 |
Call Option Premium for October 31 (strike price $1.15) |
||||||
September 15 | $ | 1.15 | $ | 1.21 | $ | 0.050 | |||
September 30 | 1.20 | 1.24 | 0.085 | ||||||
October 31 | 1.25 | 1.25 | 0.100 | ||||||
Vino Veritas Company has an incremental borrowing rate of 12 percent (1 percent per month) and closes the books and prepares financial statements at September 30.
Assume that the wine arrived on September 15, and the company made payment on October 31. There was no attempt to hedge the exposure to foreign exchange risk. Prepare journal entries to account for this import purchase.
Assume that the wine arrived on September 15, and the company made payment on October 31. On September 15, Vino Veritas entered into a 45-day forward contract to purchase 276,000 euros. It properly designated the forward contract as a fair value hedge of a foreign currency payable. Prepare journal entries to account for the import purchase and foreign currency forward contract.
Vino Veritas ordered the wine on September 15. The wine arrived and the company paid for it on October 31. On September 15, Vino Veritas entered into a 45-day forward contract to purchase 276,000 euros. The company properly designated the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate. Prepare journal entries to account for the foreign currency forward contract, firm commitment, and import purchase.
The wine arrived on September 15, and the company made payment on October 31. On September 15, Vino Veritas purchased a 45-day call option for 276,000 euros. It properly designated the option as a cash flow hedge of a foreign currency payable. Prepare journal entries to account for the import purchase and foreign currency option.
The company ordered the wine on September 15. It arrived on October 31, and the company made payment on that date. On September 15, Vino Veritas purchased a 45-day call option for 276,000 euros. It properly designated the option as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the spot rate. Prepare journal entries to account for the foreign currency option, firm commitment, and import purchase.
Vino Veritas Company, a U.S.-based importer of wines and spirits, placed an order with a French...
Vino Veritas Company, a U.S.-based importer of wines and spirits, placed an order with a French supplier for 1,200 cases of wine at a price of 230 euros per case. The total purchase price is 276,000 euros. Relevant exchange rates for the euro are as follows: Date September 15 September 30 October 31 Spot Rate $1.15 1.20 1.25 Forward Rate to October 31 $1.21 1.24 1.25 Call Option Premium for October 31 (strike price $1.15) $ 0.050 0.085 0.100 Vino...
Vino Veritas Company, a U.S.-based importer of wines and spirits, placed an order with a French supplier for 2,200 cases of wine at a price of 260 euros per case. The total purchase price is 572,000 euros. Relevant exchange rates for the euro are as follows: Date Spot Rate Forward Rate to October 31 Call Option Premium for October 31 (strike price $1.65) September 15 $ 1.65 $ 1.71 $ 0.035 September 30 1.70 1.74 0.070 October 31 1.75 1.75...
Vino Veritas Company, a U.S.-based importer of wines and spirits, placed an order with a French supplier for 1,500 cases of wine at a price of 250 euros per case. The total purchase price is 375,000 euros. Relevant exchange rates for the euro are as follows: Spot rate Forward rate to October 31 Call Option preiumum for october 31 strick price 1.25 9/15/2015 1.25 1.31 0.040 9/30/2013 1.30 1.34 0.075 10/31/2015 1.35 1.35 0.100 9/30 Forward Contract Gain on forward...
Zorba Company Zorba Company, a U.S.-based importer of specialty olive oil, placed an order wit a foreign supplier for 500 cases of olive oil at a price of 100 crowns per case. Th total purchase price is 50,000 crowns. Relevant exchange rates are as follows: Spot Rate Forward Rate (to January 31, Year 2) Call Option Premium for January 31, Year 2 (strike price $1.00) Date December 1, Year 1..... December 31, Year 1.... January 31, Year 2...... $1.00 1.10...
how do you find foward contract and gain on forward contract? confused cant figure it out for 9/30. also how would you figure it out on 10/31? can you please show work. thanks Date September 15 September 30 October 31 Spot Rate $ 1.25 1.30 1.35 Forward Rate to October 31 $ 1.31 1.34 1.35 Call Option Premium for October 31 (strike price $1.25) $ 0.040 0.075 0.100 Vino Veritas Company, a U.S.-based importer of wines and spirits, placed an...
CASE THREE, ALEXANDER Inc. Sometimes in November Year 1 (Y1), Alexander Inc., a US based importer of olive oil placed an order for 500 cases of olive oil at a price of 100 Euros per case. The pertinent exchange rates are given below. DATE SPOT FORWAR RATE CALL OPTION PREMIUM FOR RATE (to January 31, Y2) 1/31/Y2 (Strike price of $1) 12/1/Y1 $1.00 $1.08 $0.04 12/31/Y1 $1.12 $1.20 $0.12 1/31/Y2 $1.15 $1.15 ...
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