Questions from Intermediate Accounting

Q: What is the difference between a forward contract and a futures contract

What is the difference between a forward contract and a futures contract?

Q: On January 1 of Year 1, the company entered into a

On January 1 of Year 1, the company entered into a 2-year $100,000 variable interest rate loan. In the first year of the loan, the interest rate is 10%. In its second year, the interest rate is equal...

Q: Refer to Practice 19-3 and Practice 19-4.

Refer to Practice 19-3 and Practice 19-4. What would be the impact on the golf course developer’s total cash payment to purchase trees in Year 2 if the forward contract had been for just 1,500 trees r...

Q: On December 1 of Year 1, the company made a $

On December 1 of Year 1, the company made a $100,000 investment in a highly risky Internet stock. The investment is classified as a trading security. Part of the investment agreement prevents the comp...

Q: A farmer expects to sell 5,000 bushels of corn on

A farmer expects to sell 5,000 bushels of corn on January 1 of Year 2. On December 1 of Year 1, the farmer enters into a futures contract to sell the corn on January 1 of Year 2 at $2.30 per bushel. T...

Q: Compute the notional amount of the derivative contract for each of the

Compute the notional amount of the derivative contract for each of the following: 1. The interest rate swap contract. 2. The tree forward contract. 3. The copper futures contract. 4. The corn futures...

Q: Refer to Practice 19-1. Make any necessary journal entry

Refer to Practice 19-1. Make any necessary journal entry on the borrowing company’s books on December 31 of Year 1 in connection with the interest rate swap, assuming that the prime lending rate on De...

Q: Refer to Practice 19-3. Make any necessary journal entry

Refer to Practice 19-3. Make any necessary journal entry on the golf course developer’s books on December 31 of Year 1 in connection with the tree forward contract, assuming that the price per tree on...

Q: Refer to Practice 19-1 and complete the following:

Refer to Practice 19-1 and complete the following: 1. Compute the total amount (including all swap-related cash flows) that the company will pay in interest in Year 2, assuming that the prime lending...

Q: The company is a golf course developer that constructs approximately 15 courses

The company is a golf course developer that constructs approximately 15 courses per year. Next year, the company will buy 5,000 trees to install in the courses it builds. In recent years, the price of...