On September 1, 2013, Compucat Purchased Components from Its German

question 21

Essay

On September 1, 2013, Compucat purchased components from its German supplier for 100,000 Euros. On that date AMC entered into a forward contract for 100,000 Euros at the 60 day forward rate of 1Euro = $1.50CDN. The forward contract was designated as a fair value hedge of the amount payable to the German supplier. Compucat settled with the bank and paid its supplier in full on December 1, 2013. On December 1, 2013 Compucat also shipped a batch of laptop computers to an American client for $250,000US. The invoice required that Compucat receive its payment in full by January 31, 2013. On the date of the sale, the company entered into a forward contract for $250,000US at the two-month forward rate of $1US = $1.25CDN. This forward contract was designated to be a fair value hedge of the amount due from the American customer. The dates and exchange rates relevant to these transactions are shown below. Prepare the December 31, 2013 Balance Sheet Presentation of the Receivable from the American client and the accounts associated with the hedge.

---

Definitions:

Indentured Servitude

A labor system where people paid for their passage to a new country by working for an employer for a certain number of years.

Emancipation

The act of freeing someone from slavery or bondage, often historically relating to the emancipation of enslaved African Americans in the United States.

English Law

The legal system of England and Wales, which is based on common law principles, including statutes, judicial decisions, and traditional customs.

Epidemics

Outbreaks of diseases that spread rapidly and extensively by infection among many individuals in an area or a population at the same time.