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:

Divisional Structure

constitutes an organizational framework where divisions are established based on products, services, market geography, or customer types and operate semi-autonomously with their own resources.

Matrix Structure

is an organizational layout that assigns employees to projects and functional areas simultaneously, allowing for more dynamic and flexible team composition.

Team Leaders

Leaders who report to middle managers and supervise non-managerial workers.

Performance Accountability

The process of holding individuals or groups responsible for achieving specific outcomes or performance targets.