On 12/1/06, Purorc Ordered Machinery (Under a Noncancelable Purchase Order)

Essay

On 12/1/06, Purorc ordered machinery (under a noncancelable purchase order) from a Dutch vendor. The contract price was 1,000,000 euros. Concurrently, Purorc entered into a 60-day FX forward to buy 1,000,000 euros at the forward rate of $.96. Purorc took delivery of the machinery on 12/16/06 and paid the vendor on 1/30/07 via a bank wire transfer. Direct exchange rates for euros are as follows:
Required:
a. Prepare a partial balance sheet for Purorc at 12/31/06. (Be sure to include the machine as a fixed asset.)
b. Prepare a partial income statement for Purorc for 2006.