Use the Following Information to Answer the Question(s)below

question 21

Multiple Choice

Use the following information to answer the question(s) below.
On December 1,2014,Thomas Company,a U.S.corporation,purchases inventory from a vendor in Italy for 400,000 euros.Payment is due in 90 days.To hedge the transaction,Thomas signs a forward contract to buy 400,000 euros in 90 days at $1.3670.Thomas uses a discount rate of 6% (present value factor for 30 days = .9950;60 days = .9901;90 days = .9851) .Assume the forward contract will be settled net and this is a cash flow hedge.Currency exchange rates are shown below:

-What is the fair value of the forward contract at February 29?

• A)$-0-
• B)$1,654.97 asset
• C)$1,654.97 liability
• D)$1,680 asset

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Definitions:

Monitor Progress

The act of regularly assessing and documenting the advancement or change in a project, health status, or other ongoing activities.

Center of Gravity

The point in an object where its mass is concentrated, and around which its weight is evenly dispersed when in a uniform gravitational field.

Base of Support

The area beneath an object or person that provides support and stability.

Narrows

A geographical feature where a body of water is constricted between two landforms.