question archive On September 1, 2017, CLARK Company purchased machine parts from LYNDON Company for 6,000,000 Hong Kong dollars to be paid on January 1, 2018
On September 1, 2017, CLARK Company purchased machine parts from LYNDON Company for 6,000,000 Hong Kong dollars to be paid on January 1, 2018
Subject:AccountingPrice: Bought3
On September 1, 2017, CLARK Company purchased machine parts from LYNDON Company for 6,000,000 Hong Kong dollars to be paid on January 1, 2018. The exchange rate on September 1 is HK$7.7=P1. On the same date, CLARK enters into a forward contract and agrees to purchase HK$6,000,000 on January 1, 2018, at the rate of HK$7.7=P1. On December 31, 2017 and on January 1, 2018, the exchange rate is HK$8.0=P1.
1. What is the gain or loss on the forward contract on December 31, 2017?
2. What is the notional value of the HK$ forward contract?
