On December 1, 2020, Venice Company (a U.S.-based company) entered into a three-month forward contract to purchase 1,410,000 pesos on March 1, 2021. The following U.S. dollar per peso exchange rates...


On December 1, 2020, Venice Company (a U.S.-based company) entered into a three-month forward contract to purchase 1,410,000 pesos on March 1, 2021. The following U.S. dollar per peso exchange rates apply:









































DateSpot RateForward Rate
(to March 1, 2021)
December 1, 2020$0.026$0.029
December 31, 20200.0280.031
March 1, 20210.032N/A


Ignoring present values, Which of the following correctly describes the manner in which Venice Company will report the forward contract on its December 31, 2020, balance sheet?






  • As an asset in the amount of $1,410







  • As a liability in the amount of $1,410







  • As an asset in the amount of $2,820







  • As a liability in the amount of $2,820






Jun 11, 2022
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