Fourteen days after the forward rate agreement has been entered into by Litra Ltd, is it possible for the company to retrospect…

SOLUTION AT Australian Expert Writers

Litra Ltd has a foreign currency payable of FC68 000 arising from the acquisition of
inventory, which is payable in 60 days’ time. On the same date as the purchase of
inventory occurred, Litra entered into a forward rate agreement with XY Bank for the
delivery of FC68 000 in 60 days’ time. Management entered into this agreement because
the company’s accountant had drawn attention to the large number of likely inventory
purchases denominated in FC. Fourteen days after entering the forward rate agreement,
it has become obvious that the agreement is effectively hedging 100% of the foreign
currency risk of the payable of FC68 000.
Required
Fourteen days after the forward rate agreement has been entered into by Litra Ltd, is it
possible for the company to retrospectively designate the hedging arrangement as such
for the purposes of AASB 9? Explain. (LO6)

Order from Australian Expert Writers
Best Australian Academic Writers

QUALITY: 100% ORIGINAL PAPERNO PLAGIARISM – CUSTOM PAPER