MODERN ADVANCED ACCOUNTING
COMPREHENSIVE EXAM SCRIPT VERIFIED
QUESTIONS AND SOLUTIONS GRADED
APLUS
●● An increase in the fair value of a foreign currency forward contract
used to hedge a fair value exposure of a foreign currency denominated
asset or liability is reported as
Answer: An asset on the balance sheet. And
A gain in net income
●● The fair value of a foreign currency firm commitment that is being
hedged by a foreign currency option is determined by referring to
changes in the
Answer: spot rate for the foreign currency
●● To qualify for hedge accounting, a foreign currency derivative must
be highly ____ in hedging foreign exchange risk
Answer: effective
●● A foreign currency forward contract to purchase foreign currency at a
specific future date will be beneficial if
Answer: the forward rate is lower than the future spot rate.
,●● The price at which foreign currency can be purchased with U.S.
dollars is the ____ rate for that foreign currency.
Answer: exchange
●● An increase in the fair value of a foreign currency forward contract
used to hedge a cash flow exposure related to a foreign currency
denominated asset or liability is reported as
Answer: An asset on the balance sheet.
And
A deferred gain in accumulated other comprehensive income (AOCI)
●● In accounting for a fair value hedge of a foreign currency
denominated asset or liability, the change in fair value of a foreign
currency derivative is reported
Answer: As a gain or loss in net income
and
as an asset or liability on the balance sheet.
●● The _____ exchange rate is the price at which a foreign currency can
be purchased or sold today
Answer: Spot
, ●● A foreign currency option is always reported on the balance sheet at
its
Answer: Fair value
●● The amount recognized as cost of good sold related to imported
goods that are paid for it in a foreign currency is
Answer: determined by the spot rate on the date of purchase with no
further adjustments
●● The appreciation of a foreign currency will result in an exporter
recognizing a foreign exchange _____ when it makes a foreign currency
sale to a foreign currency sale to a foreign customer and receives
payment after the date of sale
Answer: gain
●● In accounting for a cash flow hedge of a foreign currency
denominated asset or liability the change in fair value of a foreign
currency
derivativehttps://partypulseglobal.imakenews.com/twtrends/Home is
reported as
Answer: an asset or liability on the balance sheet
and
a deferred gain or loss in accumulated other comprehensive income
COMPREHENSIVE EXAM SCRIPT VERIFIED
QUESTIONS AND SOLUTIONS GRADED
APLUS
●● An increase in the fair value of a foreign currency forward contract
used to hedge a fair value exposure of a foreign currency denominated
asset or liability is reported as
Answer: An asset on the balance sheet. And
A gain in net income
●● The fair value of a foreign currency firm commitment that is being
hedged by a foreign currency option is determined by referring to
changes in the
Answer: spot rate for the foreign currency
●● To qualify for hedge accounting, a foreign currency derivative must
be highly ____ in hedging foreign exchange risk
Answer: effective
●● A foreign currency forward contract to purchase foreign currency at a
specific future date will be beneficial if
Answer: the forward rate is lower than the future spot rate.
,●● The price at which foreign currency can be purchased with U.S.
dollars is the ____ rate for that foreign currency.
Answer: exchange
●● An increase in the fair value of a foreign currency forward contract
used to hedge a cash flow exposure related to a foreign currency
denominated asset or liability is reported as
Answer: An asset on the balance sheet.
And
A deferred gain in accumulated other comprehensive income (AOCI)
●● In accounting for a fair value hedge of a foreign currency
denominated asset or liability, the change in fair value of a foreign
currency derivative is reported
Answer: As a gain or loss in net income
and
as an asset or liability on the balance sheet.
●● The _____ exchange rate is the price at which a foreign currency can
be purchased or sold today
Answer: Spot
, ●● A foreign currency option is always reported on the balance sheet at
its
Answer: Fair value
●● The amount recognized as cost of good sold related to imported
goods that are paid for it in a foreign currency is
Answer: determined by the spot rate on the date of purchase with no
further adjustments
●● The appreciation of a foreign currency will result in an exporter
recognizing a foreign exchange _____ when it makes a foreign currency
sale to a foreign currency sale to a foreign customer and receives
payment after the date of sale
Answer: gain
●● In accounting for a cash flow hedge of a foreign currency
denominated asset or liability the change in fair value of a foreign
currency
derivativehttps://partypulseglobal.imakenews.com/twtrends/Home is
reported as
Answer: an asset or liability on the balance sheet
and
a deferred gain or loss in accumulated other comprehensive income
