ACCT425 TEST #2 1. The______________________ is the price at which a foreign currency can be purchased or sold today. The ________________ is the price that can be locked-in today at which foreign...

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ACCT425 TEST #2 1. The______________________ is the price at which a foreign currency can be purchased or sold today. The ________________ is the price that can be locked-in today at which foreign currency can be purchased or sold at a predetermined date in the future. 2. A derivative is a contract between two or more parties. List four of the common underlying instruments for derivatives. 3. When discussing foreign currency exchange, there are several arrangements. List two of these. 4. The timelines for the new revenue recognition standard for companies to implement was U.S. Public Companies annual reporting periods beginning after 12/15/17 and for private companies FY beginning after 12/15/18. The new rules provide guidance relevant to an entity’s accounting for revenue arising from a contract with a customer to transfer goods or services as well as contracts to transfer nonfinancial assets, unless those contracts are within the scope of other guidance. What are the types of contracts that fall outside of the scope of the new revenue recognition standard? 5. Explain what the “strike price” is. 6. What does the word hedging mean? Why do companies hedge foreign exchange risk? 7. On what financial statement(s) is/are derivatives listed and how are they valued? 8. There are ten important things to know about the new revenue recognition guidance. Identify one of the ten (list specifically which one you are referring to) and then discuss in your own words what you think its impact will be. 9. Guidance for hedging can be found in what two IAS. 10. On December 1, 2021, El Primero Company purchases inventory from a foreign supplier for 50,000 coronas. Payment will be made in 90 days after El Primero has sold this merchandise. Sales are made rather quickly, and El Primero pays this entire obligation on February 15, 2022. The following exchange rates for 1 corona apply: DateUS Dollar per Corona December 1, 2021$0.95 December 31, 2021$0.89 February 15, 2022 $0.94 Prepare all journal entries for El Primero in connection with the purchase and payment. El Primero’s fiscal year is calendar year. 11. IFRS 3 Business Combinations core principle is that an acquirer of a business recognizes the assets acquired and liabilities assumed at their acquisition date fair values and disclose that information. What are the three issues that must be resolved in accounting for a business combination? 12. What did the new head of the IASB set as his first three priorities? 13. When did IFRS 16 go into effect for the three different types of organizations and what are the three key points that auditors will focus on during the first audit? EXTRA CREDIT At the request of several students, this extra credit is being presented to improve your grade on the first test. If you answer the question correctly, the points attached to the question will be added to your first test grade to a maximum grade of 100. (15 points) The OECD has steered the negotiations for the global minimum tax rate of 15% and 136 countries have agreed to it. What is the estimated annual amount that this rate will generate in additional global tax revenues? The countries behind the accord together account for what percentage of the global economy? And what were the three main points of the accord held late last year?