Castejons incremental borrowing rate is 12 per annum., Ask an Expert

Accounting

On June 1, Castejon Corp. purchased merchandise from a Brazilian supplier at a price of 1,200,000 reals. The invoice is due on September 1. O June 1, Castejon signed a forward contract to purchase 1,200,000 reals on September 1. Information you may find useful is below:

Date Spot Rate Forward rate
June 1 $0.085 $0.089
June 30 0.088 0.092
Sept 1 0.082 n/a

Castejon's incremental borrowing rate is 12% per annum. Castejon needs to prepare quarterly financial statements at June 30.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M945863

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