EQUITY INVESTMENT AND DERIVATIVE

1. These are the transactions of Hadia’s company in 2018 and 2019:

 On January 5 2018, Hadia Company’s buying Genia’s 30,000 outstanding shares, at a
cost of $9 per share. This share purchase makes Hadia Company has a 25% of Genia
Company.
 On December 31 2018, Genia reported a net income of $85,000 for the year
 On June 15 2019 Genia Company declared and paid a cash dividend of $36,000
 On December 31 2019, Genia reported a net loss of $15,000 for the year

Determine :

a. Prepare all necessary journal entries in 2018

2. Red Company uses chili in the production of bon cabe. Red Company anticipates that it
will need to purchase 200 kg of chili in October 2019 for the holiday season. To hedge
the risk of increased chili prices, on May 1, 2019, Red Company enters into a futures
contract and designates this futures contract as a cash flow hedge of the anticipated chili
purchase. The amount of the contract is 200 kg, and the terms of the contract give Red
Company the right and the obligation to purchase chili at a price of Rp. 50,000 per kg.
The price will be good until the contract expires on November 30, 2019.

Date Spot Price for November

May 1, 2019 50,000 per kg
June 30, 2019 52,000 per kg

Determine :

a. Prepare the journal entries, on May, June, and September 2019

b. Prepare the journal entries October 5, 2019— Red Company purchases 200 Kg of
chili at Rp. 52,500 per Kg and settles the futures contract.
c. December 15, 2019—Red Company sells chili purchased in October 2019 for Rp.
25,000,000. The cost of the finished goods inventory is Rp.14,000,000.