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PROBLEM 32-12: Letter/Answer B

The document contains information about several derivative contracts including forward contracts, call options, and put options. It provides details such as notional amounts, strike prices, market prices on valuation dates, and calculations of fair values and unrealized gains/losses. The document presents this information through examples of specific derivative transactions and questions about their accounting treatment.

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Kristy Dela Cerna
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50 views6 pages

PROBLEM 32-12: Letter/Answer B

The document contains information about several derivative contracts including forward contracts, call options, and put options. It provides details such as notional amounts, strike prices, market prices on valuation dates, and calculations of fair values and unrealized gains/losses. The document presents this information through examples of specific derivative transactions and questions about their accounting treatment.

Uploaded by

Kristy Dela Cerna
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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PROBLEM 32-12

LETTER/ANSWER
B Question 1
notional figure= 8000
notional val = 8000 kls
fixed price= 1200

(8000 x 1200)
8,000 x 1,200 = 9,600,000

C Question 2

Market price - Dec. 31/15 1500


Underlying fixed price 1200
Derivative asset 300

Forward contract receivable (8,000 x 300) 2,400,000

Present value of derivative asset (2,400,000 x .91)

B Question 3

Market price - Dec. 31/16 1000


Underlying fixed price 1200
Derivative liability 200

Forward contract receivable (8,000 x 200) 1,600,000


2,184,000
PROBLEM 32-13
LETTER/ANSWER
A Question 1

Market price - Dec. 31/15


Underlying strike price
Derivative asset

Call option (50000x10)


Payment for call option
Unrealized gain -OCI

A Question 2

Market price - July 1, 2016


Underlying strike price
Derivative asset

Call option - 7/1/16 (50,000x15)

C Question 3

Market price - 7/1/16 (50,000x115)


Cumulative unrealized gain (450,000+250,000)
Cost of purchases

Call option 7/1


Call option 12/31/15
110
100
10

500,000
(50,000)
450,000

115
100
15

750,000

5,750,000
(700,000)
5,050,000

750,000
500,000
250,000
PROBLEM 32-14

LETTER/ANSWER
A Question 1

Market price - Dec. 31/17


Underlying strike price
Derivative asset

Call option (200,000x3)


Payment for call option
Unrealized gain -OCI

A Question 2

The loss on call option is equal only to the payment of 20,000.

A Question 3

Market price - 7/1/18


Underlying strike price
Derivative liability

200,000 x 4 800,000

B Question 4

Market price - 7/1/18 (200,000x21)


Unrealized loss (800,000-20,000)
Cost of purchases
28
25
3

600,000
(20,000)
580,000

the payment of 20,000.

21
25
4

4,200,000
780,000
4,980,000

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