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

question 19

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 cash-flow hedge. What amount should be recognized as other comprehensive income at April 30, 20X2?

• A)$ 320
• B)$ 640
• C)$4,640
• D)$5,280

---

Definitions:

Inhospitable

Describes an environment that is extremely difficult for living organisms to survive in due to harsh conditions.

Inhospitable

Referring to environments that are harsh, difficult to live in, or unwelcoming to human settlement or certain forms of life.

Insecticide

Chemical substances used to kill or manage the population of insects, often employed in agriculture, public health, and homes.