HCB, a Canadian Public Company, Entered into the Following Transactions

question 23

Essay

HCB, a Canadian public company, entered into the following transactions late in 20X6:
• Transaction #1: On October 15, HCB purchased inventory from a Mexican supplier for 800,000 pesos (Ps). On the same day, HCB entered into a forward contract for Ps 800,000 at the 60-day forward rate of Ps1 = $0.399. The company has designated this as a fair-value hedge. The Mexican supplier was paid in full on December 15, 20X6.
• Transaction #2: On November 1, HCB contracted to sell inventory to a customer in Switzerland at a selling price of CHF 400,000. The contract called for the merchandise to be delivered to the customer on December 1, with payment to be received in Swiss francs by January 31, 20X7. On November 1, HBC arranged a forward contract to deliver CHF 400,000 on January 31, 20X7, at a rate of CHF1 = $1.20. The company has designated this as a fair value hedge on a firm commitment.
• On December 1, 20X6, the forward rate on the Swiss francs to January 31, 20X7, was CHF1 = $1.21.
• The company has a December 31, 20X6, year-end. On this date the forward rate for the Swiss franc was CHF1 = $1.23.
HBC has a year-end of December 31. Spot rates were as follows during this period of time:
$\begin{array}{lll}\text { October 15, 20X6 } & \text { Ps1 }=\$ 0.396 & \text { SF1 }=\$ 1.19 \\\text { November } 1,20X6 & \text { Ps1 }=\$ 0.391 & \text { SF1 }=\$ 1.17 \\\text { December } 1,20X6 & \text { Ps1 }=\$ 0.389 & \text { SF1 }=\$ 1.20\\\text { December } 15,20 \times 6 & \mathrm{Ps} 1=\$ 0.388 & \mathrm{SF} 1=\$ 1.19 \\\text { December } 31,20 \times 6 & \mathrm{Ps} 1=\$ 0.381 & \mathrm{SF} 1=\$ 1.21 \\\text { January } 31,20 \times 7 & \mathrm{Ps} 1=\$ 0.376 & \mathrm{SF} 1=\$ 1.19\end{array}$

- Required:
The company uses the net method to record hedging transactions. Prepare the journal entries that HCB should make to record the events described above.

Comprehend the phenomenon of false consensus and its psychological basis.

Describe the concept of locus of causality in the context of attribution theory.

Understand the principle that cognitive processing can be dual - involving both experiential and cognitive systems.

Recognize the influence of Gestalt principles on perception and cognition.

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Definitions:

Competencies

Refers to the skills, knowledge, and abilities that individuals need to perform effectively in their roles.

Contingencies

Events or conditions that are possible but cannot be predicted with certainty, often requiring planning for multiple potential outcomes.

Social Acceptance

The act of being recognized, approved, or accepted within a social group or society at large.

Cognitive Intelligence

The ability to learn, understand, reason, and solve problems through mental processes, including memory, awareness, and perceptual cognition.