AFAR Problem.doc

# A 7000 units b 4000 units c 3000 units d 2000 units

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A. 7,000 units B. 4,000 units C. 3,000 units D. 2,000 units 128. What is the equivalent unit of production for direct material under average process costing? A. 42,650 units B. 41,150 units C. 38,250 units D. 43,750 units 129. What is the equivalent unit of production for conversion cost under average process costing? A. 44,650 units B. 45,150 units C. 43,250 units D. 46,150 units 130. What is the equivalent unit of production for direct material under FIFO costing? A. 35,150 units B. 37,250 units C. 36,150 units D. 38,450 units 131. What is the equivalent unit of production for conversion cost under FIFO costing? A. 39,150 units B. 41,250 units C. 37,450 units D. 38,650 units

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Page 41 Numbers 132, and 133 (Foreign currency hedge) On December 1, 2020, Entity A imported goods at a price of \$1,000 payable on March 1, 2021. In order to hedge this foreign currency denominated importation, Entity A entered into a forward contract with a bank to purchase \$1,000. Entity A is operating in Philippine economy where the functional currency is Philippine peso. The following direct exchange rates are given: December 1, 2020 December 31, 2020 March 1, 2021 Buying spot P43 P40 P41 Selling spot 45 44 49 132. What is the foreign currency gain or loss on the hedged item for 2020? A. 2,000 loss B. 1,000 gain C. 3,000 gain D. 4,000 gain 133. What is the foreign currency gain or loss on the hedging instrument for 2021? A. 4,000 gain B. 2,000 loss C. 1,000 loss D. 3,000 gain
Page 42 Numbers 134 and 135 (Hedging) Kline Company purchased inventory on November 30, 2018 for \$10,000 payable March 1, 2019. On December 1, 2018, the entity entered into a forward contract to purchase \$10,000in 90 days to hedge the purchase of inventory on November 30, 2018. The relevant exchange rates are: Spot rate Forward rate November 30, 2018 P45 P47 December 1, 2018 46 48 December 31, 2018 50 51 134. What amount of foreign currency transaction gain from the forward contract should be included in net income for 2018? A. 50,000 B. 40,000 C. 30,000 D. 0 135. What amount of foreign currency transaction loss should be included in income from the revaluation of accounts payable for 2018? A. 40,000 B. 50,000 C. 10,000 D. 0 Number 136 (Hedging) On December 1, 2018 Winston Company entered into a forward contract to purchase \$10,000 in 90 days to hedge a commitment to purchase equipment being manufactured to the entity’s specifications. The expected delivery date is March 1, 2019, at which time settlement is due to the manufacturer. The hedge qualifies as a fair value hedge. The relevant exchange rates are: Spot rate Forward rate December 1, 2018 P48 P49 December 31, 2018 52 51 What amount of foreign currency transaction gain from the forward contract should be included in net income for 2018? A. 20,000 B. 40,000 C. 10,000 D. 0

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Page 43 Numbers 137 and 138 (Fair value hedge) On November 1, 2020, Entity A entered into a firm commitment for the exportation of goods at a price of \$2,000. Delivery will happen on January 31, 2020. In order to hedge this foreign currency denominated firm commitment, Entity A entered into a forward contract with a bank to sell \$2,000.
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