On December 1, 2011, Joseph Company, a U

question 16

Multiple Choice

On December 1, 2011, Joseph Company, a U.S. company, entered into a three-month forward contract to purchase 50,000 pesos on March 1, 2012, as a fair value hedge of a foreign currency denominated account payable. The following U.S. dollar per peso exchange rates apply:

Joseph's incremental borrowing rate is 12 percent. The present value factor for two months at an annual interest rate of 12 percent is .9803. Which of the following is included in Joseph's December 31, 2011 balance sheet for the forward contract?

• A) $5,146.58 asset.
• B) $5,146.58 liability.
• C) $500.00 liability.
• D) $490.15 asset.
• E) $490.15 liability.

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Definitions:

Due Diligence Reports

Comprehensive assessments conducted to evaluate the business’s legal, financial, and operational status before entering into an agreement or transaction.

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Documents that outline detailed plans for spending capital with the intent of generating returns or profits.

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Reports aimed at providing facts and data without rendering opinions or recommendations.

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Detailed documents that provide data analysis, explanations, and recommendations, aiming to support decision-making processes.