Barnes Company Entered into a Forward Contract During the Current

question 14

Multiple Choice

Barnes Company entered into a forward contract during the current year to hedge the risk of a material supply cost increase.Based on the current market,at year-end the present value of the estimated amount they will have to pay in ten months is $750,000.What entry would be recorded at year-end closing,assuming that no amount was recorded for this contract until this time?

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Definitions:

Personal Property

Movable property that is not fixed to one location, such as furniture, vehicles, and electronic equipment, as opposed to real property like land or buildings.

Uniform Transfers

Refers to legislation that standardizes the procedures for transferring titles or ownership of assets in a uniform manner across different jurisdictions.

Minor

A person who is under the age of legal adulthood and therefore may be restricted in certain legal capacities and responsibilities.

Real Property

Land and anything permanently affixed to it, such as buildings or trees, recognized as a form of asset.