Essay
Short Link Company (SLC)issued a purchase order to buy a machine from Frankfurt Ltd. ,a German company,on April 2,20X6.The contract price is €650,000 and delivery is to occur on August 31,20X6.Payment is due on October 15,20X6.
SCL entered into a forward contract to hedge against the Euro exchange rate for €1 million coming due on August 31,20X6.SLC has a December 31 year end.
Delivery of the machine occurred on the date specified and the company paid the amount and settled the forward contract October 15,20X6.
The exchange rates were as followed:
Required:
SLC reports under ASPE.
a.Explain how the forward contract will be accounted for under ASPE.
b.Prepare the journal entries to record the above transactions.
Correct Answer:
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a.Under ASPE,the forward contract is all...View Answer
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