Assuming a Forward Contract Was Entered into on December 16

question 54

Multiple Choice

Assuming a forward contract was entered into on December 16, what would be the net impact on Car Corp.'s 2019 income statement related to this transaction?

• A) $ 500 (gain).
• B) $ 500 (loss).
• C) $ 300 (gain).
• D) $ 300 (loss).
• E) $0.

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Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing the ownership interest of shareholders.

Equity Securities

Financial instruments representing ownership in a company, such as stocks, which provide a claim to a portion of the company's profits and assets.

Market Prices

The current value at which an asset or service can be bought or sold in a marketplace.

Carrying Value

Carrying Value, also known as book value, is the value of an asset as it appears on a balance sheet, calculated by netting the asset against its accumulated depreciation.