On December 1, 2016, Dorn Corporation Agreed to Purchase a Machine

question 29

Essay

On December 1, 2016, Dorn Corporation agreed to purchase a machine to be manufactured by a company in Brazil. The purchase price is 1,150,000 Brazilian reals. To hedge against fluctuations in the exchange rate, Dorn entered into a forward contract on December 1 to buy 1,150,000 reals on April 1, the agreed date of machine delivery, for $0.375 per real. The following exchange rates were quoted: Required:
Prepare journal entries necessary for Dorn during 2016 and 2017 to account for the transactions described above.

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Definitions:

Procedures

Established methods or ways of doing something, often detailed and written down, especially in the context of business operations or professional practices.

Collective Efficacy

A group's shared belief in its conjoint capabilities to organize and execute the courses of action required to produce given levels of attainments.

Group's Shared Perception

The common understanding or viewpoint held by members of a group about a situation, idea, or each other.

Specific Tasks

Particular and defined pieces of work or duties assigned to someone as part of a job or course of study.