Hamilton corporation purchased good from a foreign supplier at a price of 1,000,000 markas it will make payment in three months on september 1. Hamilton acqured an option to purc ...there is moreshow problem on june 1, Hamilton corporation purchased good from a foreign supplier at a price of 1,000,000 markas it will make payment in three months on september 1. Hamilton acqured an option to purchase 1,000,000 markas in three monts at a strike price of 0.085 Relevent exchange rates and option premia for the make are as follows
Date sport rate call option premium for september (strike price )
june1 0.085 0.085
june 30 0.088 0.002
september 1 0.090 0.004
Hamilton must close its books and prepare its second quarter financial statements on june 30
a) Assumuming that Hamilton designates the foregin currency option as a cash flow hege of a foregin currency payable journal entries for these transaction in US. dollor. what is the impact on net income over the two accounting periods
b) Assumuming that Hamilton designates that foregin currency option as a fair value hedge of a foregin currency payable, prepare journal entries for these transaction in US. dollars. what is the impact on net income over the two accounting periods