This document discusses determining the fair value of a forward contract at a point in time. It provides an example of a company, Meisner Co., that ordered parts costing $100,000 from a foreign supplier when the spot exchange rate was PHP 24 per dollar. Meisner Co. signed a one-month forward contract on that date to purchase the $100,000 at a forward rate of PHP 25 per dollar. When payment was made and the parts received a month later, the spot rate had increased to PHP 28 per dollar. The document asks for the amount inventory should be reported at, which is PHP 28,000.
This document discusses determining the fair value of a forward contract at a point in time. It provides an example of a company, Meisner Co., that ordered parts costing $100,000 from a foreign supplier when the spot exchange rate was PHP 24 per dollar. Meisner Co. signed a one-month forward contract on that date to purchase the $100,000 at a forward rate of PHP 25 per dollar. When payment was made and the parts received a month later, the spot rate had increased to PHP 28 per dollar. The document asks for the amount inventory should be reported at, which is PHP 28,000.
This document discusses determining the fair value of a forward contract at a point in time. It provides an example of a company, Meisner Co., that ordered parts costing $100,000 from a foreign supplier when the spot exchange rate was PHP 24 per dollar. Meisner Co. signed a one-month forward contract on that date to purchase the $100,000 at a forward rate of PHP 25 per dollar. When payment was made and the parts received a month later, the spot rate had increased to PHP 28 per dollar. The document asks for the amount inventory should be reported at, which is PHP 28,000.
All of the following data may be needed to determine the fair value of a forward contract at any
point in time except
The future spot rate. Meisner Co. ordered parts costing §100,000 from a foreign supplier on May 12 when the spot rate was PhP.24 per §. A one-month forward contract was signed on that date to purchase §100,000 at a forward rate of PhP.25 per §. On June 12, when the parts were received and payment was made, the spot rate was PhP.28 per §. At what amount should inventory be reported? PhP28,000.