On March 1, 2021, Mattie Company Received an Order to Sell

question 21

Multiple Choice

On March 1, 2021, Mattie Company received an order to sell a machine to a customer in England at a price of 200,000 British pounds. The machine was shipped and payment was received on March 1, 2022. On March 1, 2021, Mattie purchased a put option giving it the right to sell 200,000 British pounds on March 1, 2022 at a price of $380,000. Mattie properly designates the option as a fair hedge of the pound firm commitment. The option cost $2,000 and had a fair value of $2,200 on December 31, 2021. The following spot exchange rates apply: Mattie's incremental borrowing rate is 12%, and the present value factor for two months at a 12% annual rate is 0.9803.What was the net impact on Mattie's 2022 income including the fair value hedge of a firm commitment?

• A) $379,760.60 decrease.
• B) $8,360.60 increase.
• C) $8,360.60 decrease.
• D) $4,390.40 decrease.
• E) $379,760.60 increase.

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Definitions:

Medical Diagnosis

A medical diagnosis is the determination of a disease or condition from its signs and symptoms by a healthcare professional.

V or Z Codes

Codes used in diagnostic systems like the DSM to indicate factors that influence health status but are not in themselves illnesses.

Cattell Classification

A scheme for categorizing human cognitive abilities proposed by psychologist Raymond Cattell.

1942 MMPI

Refers to the original version of the Minnesota Multiphasic Personality Inventory, a standardized psychometric test of adult personality and psychopathology published in 1942.