Scenario 10-2 On 4/1/X3, a U.S. Company Commits to Sell a Piece

question 1

Multiple Choice

Scenario 10-2
On 4/1/X3, a U.S. Company commits to sell a piece of equipment to a French customer. At that time, the U.S. company enters into a forward contract to sell foreign currency on 8/1/X3 (120 days) . Delivery will take place 7/1/X3 with payment due on 8/1/X3. The fiscal year end for the company is 6/30/X3. The sales price of the equipment is 200,000 Euros. Various exchange rates are as follows:
Discount rate is 12%.
-Refer to Scenario 10-2. What is the amount in the Firm Commitment account on 6/30/X3?

• A) 4,000 debit
• B) 8,000 debit
• C) 4,000 credit
• D) 10,000 credit

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Definitions:

Extrinsic Qualities

Characteristics or attributes that are not inherent or essential but are imposed from the outside or by external factors.

Intrinsic Qualities

The inherent characteristics, values, or virtues of a person or thing that are not dependent on external factors.

Intrinsic Motivation

Refers to the internal drive to undertake an activity for its own sake, due to interest, enjoyment, or personal satisfaction.

Quantity Of Performance

A measure of the amount of work completed within a given time frame, often used to gauge productivity.