A cash flow hedge mitigates risk exposure due to variability in cash flows associated with which of the following?
Answer(s): B
A cash flow hedge is a hedge of exposure to variability in cash flows that1) is due to a given risk associated with a recognized asset or liability or a highly probable forecast transaction and2) could affect profit or loss. A fair value hedge is a hedge of the exposure to changes in fair value of are recognized asset or liability or an unrecognized firm commitment. Thus, a cash flow hedge is associated with neither an unrecognized firm commitment nor a remotely possible forecast transaction. Illustrated below is a perpetual inventory card for the current year.Additional Information· The entity had no opening inventory.· The Items sold on March 15 were purchased on January 12.· The items sold on July 3 war purchased on May 5
The ending inventory balance under the first-in. first-outFIFO) method of inventory valuation is
Under the FIFO method, the 1.700 units of ending inventory are valued at the most recent prices. Ending inventory is assumed to include 1.000 units purchased November 24. 500 units purchased May 5. and 700 units purchased January 12. Hence, the ending inventory is US $3.150 [(1 .000 x $1 65) +500 $2.21') +700 x $2.00)].Additional Information· The entity had no opening inventory.· The Items sold on March 15 were purchased on January 12.· The items sold on July 3 war purchased on May 5
The cost of goods sold under the specific identification method of inventory valuation is
Answer(s): D
Of the 800 units sold during the period, the 300 units said on March 15 were purchased on January 12 at a cost of US $2.00 per unit. The remaining 500 units were purchased on May 5 at a cost of US $2.20 per unit. The cost of goods sold under the specific identification method is therefore US $1.700 [(300 units x $2.00) +500 units , , $2.20)].
A retail entity maintains a markup of 25 % based on cost. The entity has the following information for the current year:Beginning inventory was
Cost of goods sold equals beginning inventory, plus purchasesincluding freight-in), minus ending inventory. Given that sales reflect 125% of cost, cost of goods sold must equal US $720, 000$900.000 sales Consequently the beginning inventory must been US $85, 000$720, 000 CGS $80, 000 E $690, 000 purchases $25, 000 freight-in)
Which inventory pricing method generally approximates current cost for each of the following?
Answer(s): C
FIFO assigns the most recent purchase prices to ending inventory and the earliest purchase prices to cost of goods sold. LIFO uses the earliest acquisition costs to price the ending inventory. It is not permitted by the IFRSs. Thus. FIFO approximates current o. .$t for ending inventory, and LIFO approximates current cost of goods sold.
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