On March 1,20X2,McBride Ltd

question 41

Multiple Choice

On March 1,20X2,McBride Ltd.issued a purchase order to Tao Heavy Machines (Singapore) Inc.to acquire a drilling machine for $400,000 SGD.On the same day,McBride entered into a forward contract to receive $400,000 SGD on July 31,20X2.The machine was delivered on June 1,20X2 and payment was made July 31,20X2.McBride has an April 30 year-end.The following information has been provided:

Assume that the transaction qualifies as a fair-value hedge.At what amount should McBride record the drilling machine?

• A)$307,440
• B)$312,400
• C)$317,600
• D)$319,800

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Definitions:

Brokerage Fees

Charges imposed by a broker for facilitating transactions such as purchases, sales, and advice on these transactions.

Transfer Taxes

Taxes imposed by a state or local government on the transfer of ownership of property, such as real estate, from one party to another.

Available-For-Sale

A classification for financial assets, indicating that the asset can be sold in the future, and is not held for trading or intended to be held to maturity.

Dividends

Profits distributed by a corporation to its shareholders, usually in the form of cash or additional stock.