Woolsey Corporation, a U

question 61

Multiple Choice

Woolsey Corporation, a U.S. company, expects to sell goods to a British customer at a price of 250,000 pounds, with delivery and payment to be made on October 24. On July 24, Woolsey purchased a three-month put option for 250,000 British pounds and designated this option as a cash flow hedge of a forecasted foreign currency transaction expected to be completed in late October. The following exchange rates apply: What amount will Woolsey include as Adjustment to Net Income for the period ended October 31?

• A) $6,000 positive.
• B) $6,000 negative.
• C) $10,000 positive.
• D) $10,000 negative.
• E) $14,000 positive.