江西财经大学高级财务会计国际学院题库chapter13.docx
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江西财经大学高级财务会计国际学院题库chapter13
AdvancedAccounting,11e（Beams/Anthony/Bettinghaus/Smith）
Chapter13AccountingforDerivativesandHedgingActivities
MultipleChoiceQuestions
1）Whichofthefollowinghedgingstrategieswouldabusinessmostlikelyuse?
A）Animporterwillwanttohedgehisforeigndenominatedaccountsreceivableandwillpurchaseforwardcontractstohedgeanexposednetassetposition.
B）Animporterwillwanttohedgehisforeigndenominatedaccountspayableandwillpurchaseforwardcontractstohedgeanexposednetliabilityposition.
C）Anexporterwillwanttohedgehisforeigndenominatedaccountsreceivableandwillpurchaseforwardcontractstohedgeanexposednetliabilityposition.
D）Anexporterwillwanttohedgehisforeigndenominatedaccountspayableandwillpurchaseforwardcontractstohedgeanexposednetliabilityposition.
Answer:
B
Objective:
LO2
Difficulty:
Easy
2）Ahighly-effectivehedgeofanexistingassetorliabilitythatisreportedonthebalancesheetwouldberecordedusing
A）ModifiedCashBasisAccounting.
B）CriticalTermHedgeAnalysis.
C）FairValueHedgeAccounting.
D）HedgeofNetInvestmentinForeignSubsidiary.
Answer:
C
Objective:
LO2
Difficulty:
Easy
3）Whichofthefollowingisnotanapproachappropriateforhedgeaccounting?
A）CashFlowHedgeAccounting
B）CriticalTermHedgeAccounting
C）FairValueHedgeAccounting
D）HedgeofNetInvestmentinForeignSubsidiary
Answer:
B
Objective:
LO1,2
Difficulty:
Easy
4）Ifafinancialinstrumentisclassifiedasacashflowhedge,then
A）itsgainsorlossesarereportedintheincomestatementifafiscalyear-endoccursbeforethesettlementdate.
B）itisclassifiedasaheld-to-maturityasset.
C）itdoesnotrequireanotionalamount.
D）itsgainsorlossesarereportedinthebalancesheetifafiscalyear-endoccursbeforethesettlementdate.
Answer:
D
Objective:
LO1
Difficulty:
Easy
5）Whenacashflowhedgeisappropriate,theeffectiveportionofthegainorlossonthederivativeis
A）deferredusingothercomprehensiveincome.
B）recognizedimmediatelyatthetimetheagreementismade.
C）recognizedovertime,amortizedovertheperiodoftheagreement.
D）recognizedovertime,offsetbythefluctuationinthevalueofthehedgedassetorliability.
Answer:
A
Objective:
LO1
Difficulty:
Easy
6）BarnesCompanyenteredintoaforwardcontractduringthecurrentyeartohedgetheriskofamaterialsupplycostincrease.Basedonthecurrentmarket,atyear-endthepresentvalueoftheestimatedamounttheywillhavetopayintenmonthsis$750,000.Whatentrywouldberecordedatyear-endclosing,assumingthatnoamountwasrecordedforthiscontractuntilthistime?
A）
ForwardContract（+A）
$750,000
OtherComprehensiveIncome（+SE）
$750,000
B）
ForwardContract（+A）
$750,000
Earnings（+SE）
$750,000
C）
OtherComprehensiveIncome（-SE）
$750,000
Earnings（+SE）
$750,000
D）
OtherComprehensiveIncome（-SE）
$750,000
ForwardContract（+L）
$750,000
Answer:
D
Objective:
LO3
Difficulty:
Moderate
7）Aforwardcontractusedasacashflowhedgewillberecordedasanassetif
A）theholderisexpectingtoreceiveapaymentasaresultofthecontract.
B）theholderisaccountingforthehedgedinstrumentasafairvaluehedge.
C）theholderishedgingthenetinvestmentinaforeignentity.
D）theholderisusingthealternateaccountingmethodanddeferringallgainsorlossesfromthehedge.
Answer:
A
Objective:
LO1
Difficulty:
Easy
8）Afairvaluehedgediffersfromacashflowhedgebecauseafairvaluehedge
A）cannotbeusedforfirmpurchaseorsalescommitments.
B）isnotrecordedunlessitisahighly-effectivehedge.
C）recordsgainsorlossesinthevalueofthederivativedirectlytoearningsofthecompany.
D）defersthegainsorlossesinthevalueofthederivativeusingOtherComprehensiveIncome.
Answer:
C
Objective:
LO3
Difficulty:
Easy
9）Thepurchasepriceofanoptioncontractistypicallyrecordedas
A）anexpense.
B）anasset.
C）anamortizedcost.
D）acomponentofshareholdersequity.
Answer:
B
Objective:
LO3
Difficulty:
Easy
10）TaydusCorporation,aU.S.corporation,soldgoodsonDecember2toacompanyoverseas,andisnowcarryingareceivabledenominatedineuros.Taydussigneda60-dayforwardcontractonthatsamedatetoselleuros.Thespotratewas$1.40onthedatetheysignedthecontractandthe60-dayforwardratewas$1.36.Attheendofthatmonthwhentheyclosedthebooksattheirfiscalyear-end,thespotratewas$1.42andthe30-dayforwardratewas$1.40.Assumethisisafairvaluehedge.Theforwardcontractwillnotbesettlednet.WhatwouldbereportedbyTaydusfortheyearendingDecember31?
A）Netexchangegain
B）Netexchangeloss
C）Deferredexchangegain
D）Deferredexchangeloss
Answer:
B
Explanation:
B）Thespotrateincreased$.02,resultinginagainonthereceivable.
Theforwardrateincreased$.04,resultinginalargerlossontheforward,thustheyexperiencedanetexchangeloss.
Objective:
LO4
Difficulty:
Moderate
11）CirtusCorporation,aU.S.corporation,placedanorderforinventoryfromaMexicansupplieronSeptember18whenthespotratewas$0.0840=1peso.Theinvoicepricewillbedenominatedinpesos.Atthattime,theyenteredintoa30-dayforwardcontract（designatedasafairvaluehedgeofthefirmcommitmenttopurchase）topurchase860,000pesosataforwardrateof$0.0810.OnOctober18whentheinventorywasreceived,thespotratewas$0.0890.AtwhatamountshouldtheinventorybecarriedonCirtus'books?
A）$69,660
B）$72,240
C）$76,540
D）$860,000
Answer:
A
Explanation:
A）Inventory=860,000×.081=$69,660
Objective:
LO4
Difficulty:
Moderate
12）Whenpreparingtheiryear-endfinancialstatements,theWarnerCompanyincludesafootnoteregardingtheirhedgingactivitiesduringtheyear.Whichofthefollowingisnotrequiredtobedisclosed?
A）Howhedgeeffectivenessisdeterminedandassessed
B）Thespecifictypesofrisksbeinghedged,andhowtheyarebeinghedged
C）Alternativehedgingoptionsdeclined
D）Thenetgainorlossreportedfortheperiodforfairvaluehedgesandwhereinthefinancialstatementsitisreported
Answer:
C
Objective:
LO5
Difficulty:
Moderate
13）InternationalaccountingstandardsdifferfromU.S.GenerallyAcceptedAccountingPrinciplesinthatInternationalstandards
A）requirethatfirmsaleorpurchasecommitmentsareaccountedforasfairvaluehedges.
B）requirethatfirmsaleorpurchasecommitmentsareaccountedforascashflowhedges.
C）statethatfirmsaleorpurchasecommitmentsmaynotbetreatedasahedgedtransaction.
D）permitfirmsaleorpurchasecommitmentstobeaccountedforaseitherfairvaluehedgesorcashflowhedges.
Answer:
D
Objective:
LO6
Difficulty:
Moderate
14）OnMay1,2011,ListingCorporationreceivesinventoryitemsfromtheirBulgariansupplier.Atthesametime,Listingsignedaforwardcontracttopurchase75,000Bulgarianlevinsixtydaystohedgetheinventorypurchaseat$0.738,the60-dayforwardrate.PaymentfortheinventorywillbedueinsixtydaysinBulgarianlev.Assumetheforwardcontractwillbesettlednetandthisqualifiesasafairvaluehedge.Therelatedexchangeratesareshownbelow:
Date
SpotRate
ForwardRate
toJune30
May1,2011
$0.7270
$0.7380
May31,2011
$0.7350
$0.7400
June30,2011
$0.7420
$0.7420
Assumingapresentvaluefactorof1forsimplicity,whatisthefairvalueofthisforwardcontractonMay31?
A）$150asset
B）$150liability
C）$375asset
D）$375liability
Answer:
A
Explanation:
A）
Currentforwardrate:
75,000lev×$0.7400$55,500
Contractedforwardrate:
75,000lev×$0.738055,350
Netchangeinvalue150
WithPV=1,Netchange=assetvalue
Objective:
LO4
Difficulty:
Moderate
Usethefollowinginformationtoanswerthequestion（s）below.
OnNovember2,2011,BellamyCorporationsellsproducttotheirDanishcustomer.Atthesametime,Bellamysignedaforwardcontracttosell200,000Danishkroneinninetydaystohedgetheaccountreceivableat$0.1905,the90-dayforwardrate.Thereceivableisexpectedtobecollectedinninetydays.Assumetheforwardcontractwillbesettlednetandthisisafairvaluehedge.Therelatedexchangeratesareshownbelow:
Date
SpotRate
ForwardRate
toJanuary31
November2,2011
$0.1910
$0.1905
December31,2011
$0.1920
$0.1912
January31,2012
$0.1915
$0.1915
15）Assumingapresentvaluefactorof1forsimplicity,whatisthefairvalueofthisforwardcontractonNovember2?
A）$-0-
B）$100asset
C）$100liability
D）$38,100asset
Answer:
A
Objective:
LO4
Difficulty:
Moderate
16）Assumingapresentvaluefactorof1forsimplicity,whatisthefairvalueofthisforwardcontractonDecember31?
A）$160asset
B）$160liability
C）$140asset
D）$140liability
Answer:
D
Objective:
LO4
Difficulty:
Moderate
17）Assumingapresentvaluefactorof1forsimplicity,whatisthefairvalueofthisforwardcontractonJanuary31?
A）$-0-
B）$60asset
C）$160liability
D）$200liability
Answer:
D
Objective:
LO4
Difficulty:
Moderate
Usethefollowinginformationtoanswerthequestion（s）below.
OnDecember1,2011,ThomasCompany,aU.S.corporation,purchasesinventoryfromavendorinItalyfor400,000euros.Paymentisduein90days.Tohedgethetransaction,Thomassignsaforwardcontracttobuy400,000eurosin90daysat$1.3670.Thomasusesadiscountrateof6%（presentvaluefactorfor30days=.9950;60days=.9901;90days=.9851）.Assumetheforwardcontractwillbesettlednetandthisisacashflowhedge.Currencyexchangeratesareshownbelow:
Date
SpotRate
ForwardRate
toFebruary29
December1,20
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