On March 1,2014,Amber Company sold goods to a foreign customer at a price of 50,000 foreign currency units.The customer will pay in three months.At the time of the sale,Amber paid $2,000 to acquire an option to sell 50,000 foreign currency units in three months at the strike price of $0.39.On May 30,2014,the customer sent in 50,000 foreign currency units.Quarterly financial reports are prepared on March 31.Ignore the time value of money.Relevant exchange rates are as follows:

Required:
Prepare the journal entries required for these transactions,if the foreign currency option is designated as a fair value hedge.

Question

On March 1,2014,Amber Company sold goods to a foreign customer at a price of 50,000 foreign currency units.The customer will pay in three months.At the time of the sale,Amber paid $2,000 to acquire an option to sell 50,000 foreign currency units in three months at the strike price of $0.39.On May 30,2014,the customer sent in 50,000 foreign currency units.Quarterly financial reports are prepared on March 31.Ignore the time value of money.Relevant exchange rates are as follows:
  
Required:
Prepare the journal entries required for these transactions,if the foreign currency option is designated as a fair value hedge.

Quizplus · Accepted Answer

The Answer of On March 1,2014,Amber Company sold goods to a foreign customer at a price of 50,000 foreign currency units.The customer will pay in three months.At the time of the sale,Amber paid $2,000 to acquire an option to sell 50,000 foreign currency units in three months at the strike price of $0.39.On May 30,2014,the customer sent in 50,000 foreign currency units.Quarterly financial reports are prepared on March 31.Ignore the time value of money.Relevant exchange rates are as follows:
  
Required:
Prepare the journal entries required for these transactions,if the foreign currency option is designated as a fair value hedge.

On March 1,2014,Amber Company Sold Goods to a Foreign Customer