On March 1, 20X2, McBride Ltd -Assume That the Transaction Qualifies as a Fair-Value Hedge

question 10

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: $\begin{array}{|l|c|c|}\hline \text { Date } & \text { Spot Rate } & \text { Forward rate to July } 31,20 \times 2 \\\hline \text { March } 1,20 \times 2 & .7686 & .7810 \\\hline \text { April } 30,20 \times 2 & .7702 & .7818 \\\hline \text { June } 1,20 \times 2 & .7940 & .7985 \\\hline \text { July } 31,20 \times 2 & .7995 & \text { n/a }\\\hline \end{array}$

-Assume that the transaction qualifies as a fair-value hedge. On March 1, at what amount should the forward contract be recorded?

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

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Definitions:

DSM-5

The fifth edition of the Diagnostic and Statistical Manual of Mental Disorders, a comprehensive classification of mental disorders published by the American Psychiatric Association.

Anorexia Nervosa

A psychological disorder involving an obsessive desire to lose weight by refusing to eat and a distorted body image.

Restricting Type

A subtype of anorexia nervosa where weight loss is achieved primarily through dieting, fasting, or excessive exercise, without regular binge-eating or purging behavior.

Binge/Purge Type

Describes a behavior pattern in eating disorders characterized by episodes of excessive eating followed by efforts to avoid weight gain through purgative methods.