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At what amount should the payable be carried on primo books

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Question - Primo Inc., a U.S. company, ordered parts costing 100,000 rupee from a foreign supplier on July 7 when the spot rate was $.025 per rupee.

A one-month forward contract was signed on that date to purchase 100,000 rupee at a rate of $.027.

The forward contract is properly designated as a fair value hedge of the 100,000 rupee firm commitment.

On August 7, when the parts are received, the spot rate is $.028. At what amount should the payable be carried on Primo's books?

Reference no: EM133021671

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