Happ, IncAgreed to Purchase Merchandise from a British Vendor on November

question 69

Multiple Choice

Happ, Inc.agreed to purchase merchandise from a British vendor on November 30, 2018.The goods will arrive on January 31, 2019 and payment of 100,000 British pounds is due at that time.On November 30, 2018, Happ signed an agreement with a foreign exchange broker to buy 100,000 British pounds on January 31, 2019.Exchange rates to purchase 1 British pound are as follows: ?

$$\begin{array} { l r r r } & \text { Nov. } 30,2018 & \text { Dec. } 31,2018 & \text { Jan. } 31,2019 \\\text { Spot } & \$ 1.65 & \$ 1.62 & \$ 1.59 \\30 \text { day } & \$ 1.64 & \$ 1.59 & \$ 1.60 \\60 \text { day } & \$ 1.63 & \$ 1.56 & \$ 1.58\end{array}$$ Because of this commitment hedge, Happ, Inc.will record the merchandise at what value when it arrives in January?

• A)$165,000
• B)$164,000
• C)$163,000
• D)$159,000

---

Definitions:

Married Filing Joint

A filing status on U.S. tax returns allowing married couples to combine their incomes, deductions, and credits on a single tax return, potentially leading to tax benefits.

American Opportunity Tax Credit

A credit that allows qualifying students or their parents to reduce their federal income tax based on education expenses paid.

Modified AGI

Adjusted Gross Income with certain deductions added back in, used for determining eligibility for specific tax deductions and credits.

Single Taxpayers

Individuals who file their tax returns under the status of being unmarried without dependents.