Car Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2013, with payment of 10 million Korean won to be received on January 15, 2014. The following exchange rates applied:
Spot rate
December 16, 2013 .00092
December 31, 2013 .00090
January 15, 2014 .00095
Forward rate
December 16, 2013 .00093
December 31, 2013 .00098
January 15, 2014 .00095
Assuming a forward contract was entered into, how would the forward contract be reflected on Car's December 31, 2013 balance sheet?
Foreign currency (liability).
Foreign exchange (liability).
Forward contract (asset).
Foreign currency (asset).
Forward contract (liability).