Indicate How Each Event Affects the Elements of Financial Statements

question 48

Essay

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.Use only one letter for each element.You do not need to enter amounts.

-On December 31,2016,Flagler Corporation had a balance of $20,000 on a line-of-credit with City Bank.Flagler made a payment of $11,200,which included $10,000 on the principal and $1,200 interest.Show the effects of this transaction on Flagler's financial statements.

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Definitions:

U.S. Dollar Equivalent

The U.S. Dollar Equivalent is the amount of foreign currency expressed in terms of the value of the United States dollar, based on the current exchange rate.

Put Option

A financial instrument that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

Fair Value Hedge

A risk management strategy that uses financial instruments to mitigate the risk of changes in the fair value of an asset or liability.

Mexican Pesos

The currency of Mexico, abbreviated as MXN.