On December 1, 2021, Joseph Company, a U

question 32

Multiple Choice

On December 1, 2021, Joseph Company, a U.S. company, entered into a three-month forward contract to purchase 50,000 pesos on March 1, 2022, as a fair value hedge of a foreign currency denominated account payable. The following U.S. dollar per peso exchange rates apply: Joseph's incremental borrowing rate is 12 percent. The present value factor for two months at an annual interest rate of 12 percent is 0.9803. Which of the following is included in Joseph's December 31, 2021 balance sheet for the forward contract?

• A) $5,146.58 asset.
• B) $5,146.58 liability.
• C) $500.00 liability.
• D) $490.15 asset.
• E) $490.15 liability.

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Definitions:

Right to Strike

The legal right of workers to refuse to work as a form of protest against conditions or practices they consider unjust.

NAFTA

The North American Free Trade Agreement, a treaty entered into by the United States, Canada, and Mexico; it went into effect on January 1, 1994, and has been replaced by the USMCA (United States-Mexico-Canada Agreement) to facilitate free trade by reducing and eliminating trade barriers.

Mexican Constitution

The fundamental legal document of Mexico, outlining the structure of the government, rights of citizens, and separation of powers, enacted in 1917.

Labour Party

A political party, often found in various countries, that emphasizes workers' rights, social equality, and the promotion of labor unions.