Use the Following to Answer Questions

question 54

Multiple Choice

Use the following to answer questions:
On November 1,20x1 Zamfir Company,a U.S.corporation,purchased minerals from a Russian company for 2,000,000 rubles,payable in 3 months. The relevant exchange rates between the U.S.and Russian currencies are given: The company's incremental borrowing rate provides a discount rate of 0.975 for three months.
-Assume that on November 1,20x1 Zamfir Company enters a forward contract to buy 2,000,000 rubles on February 1,20x2. How should Zamfir report the forward contract on December 31,20x1?

• A)$8,000 asset
• B)$7,800 asset
• C)$22,000 asset
• D)$7,800 liability

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Definitions:

Prior Understandings

The pre-existing knowledge and experiences that an individual brings to a new learning situation.

Control Processes

Mental and behavioral mechanisms by which individuals regulate their thoughts, emotions, and actions in pursuit of goals.

Information-Processing Theorists

Scholars who study how human beings process information, including how they perceive, analyze, store, and recall information.

Sensory Register

The component of memory that receives and holds input from the sensory systems for a very short period of time, allowing the brain to process and respond to this information.