Hedge Instrument Spot Rate Forward
Hedge Instrument1111312311313114spot Rate120125130forward
Hedge Instrument 11/1//31/13 1/31/14 Spot Rate $1.20 $1.25 $1.30 Forward Rate $1.23 $1.26 $1.30 HedgeCo is interested in purchasing 1,000 of Product Z from OverSeas Inc. HedgeCo is very concerned about two issues: 1) that the price of Product Z will change and 2) the exchange rate will make an unfavorable change before the purchase takes place. Select a hedge and explain your selection. Use the exchange rates above to make your journal entry. Select appropriate account names for your journal entry.
Hedge Type Cash Flow Hedge and Foreign Currency Hedge Reasoning for Selection Journal Entry Account Name DR CR Describe Financial Statement Effect of each account movement Segments Instructions: Perform all quantitative tests for segment reportability. Show all calculations within the cells of this worksheet (no hard coding). Make sure that you properly label each test. HedgeCo Segment Data Income By Segment Totals Revenues Sales-External $102,787 $278,544 $471,573 $298,972 $501,236 $66,447 $1,719,559 Sales-Internal $37,904 $30,037 $79,406 $47,717 $22,498 $54,140 $271,702 Interest Income $2,704 $3,982 $1,763 $3,458 $4,411 $3,655 $19,973 Total Revenues $143,395 $312,563 $552,742 $350,147 $528,145 $124,242 $2,011,234 Expenses Cost of Sales $3,798 $2,193 $6,250 $3,501 $1,606 $7,055 $24,403 Marketing $6,533 $3,208 $12,900 $3,755 $2,788 $5,322 $34,506 Interest Expense $1,489 $1,143 $3,323 $1,984 $694 $2,256 $10,889 Total Expenses $11,820 $6,544 $22,473 $9,240 $5,088 $14,633 $69,798 Segment Profit $131,575 $306,019 $530,269 $340,907 $523,057 $109,609 $1,941,436 Assets $205,574 $557,088 $471,573 $298,972 $1,002,472 $66,447 $2,602,126 Interim Reporting Instructions: You are to prepare a list of the type of information that should appear in an interim report for HedgeCo as of 11/1/2013. I strongly suggest that you use FASB 131 as a primary source. The list should be prioritized by reasoning that is driven primarily by case facts. The assumptions should appear lower in the list. Type I Data # Item Reasoning for selection (even if it is an assumption) Type II Data # Item Reasoning for selection (even if it is an assumption) Type III Data # Item Reasoning for selection (even if it is an assumption) Translations Instructions: One of HedgeCo's subsidiaries operates in a foreign country. The financial statements must be translated into U.S. dollars for financial reporting purposes. This entity has operations that are largely independent of HedgeCo (parent). Using the appropriate method, translate the financial statements into U.S. dollars. Current Exchange Rates 1.50 Historical Rates (Equity) 0.75 Average Rate 1.10 BALANCE SHEET 12/31/13 FC Assets Cash 6000.00 Accounts Receivable 2000.00 Land 10200.00 Building (net) 30000.00 Accumulated Depreciation -30000.00 Total Assets 18200.00 Liabilities Accounts Payable 100.00 Mortgage Payable 10000.00 Equity Common Stock 100.00 Retained Earnings 8000.00 Total Liabilities & Equity 18200.00 INCOME STATEMENT Revenues 50000.00 Operating Expenses (net depreciation) -25000.00 Depreciation -5000.00 Net Income 20000.00 Note: Option 1 Template is attached in the 2nd Excel attachment. Please show formulas in Journal Entry’s transactions.