Business, 19.02.2021 01:50 olamagdziak2007

Icebreaker Company (a U. S.-based company) sells parts to a foreign customer on December 1, 2020, with payment of 16,000 dinars to be received on March 1, 2021. Icebreaker enters into a forward contract on December 1, 2020, to sell 16,000 dinars on March 1, 2021. The forward points on the forward contract are excluded in assessing hedge effectiveness and are amortized to net income using a straight-line method on a monthly basis. Relevant exchange rates for the dinar on various dates are as follows: Date Spot Rate Forward Rate (to March 1, 2021) December 1, 2020 $ 2.70 $ 2.775 December 31, 2020 2.80 2.900 March 1, 2021 2.95 N/A Icebreaker must close its books and prepare financial statements at December 31. a-1. Assuming that Icebreaker designates the forward contract as a cash flow hedge of a foreign currency receivable, prepare journal entries for the sale and foreign currency forward contract in U. S. dollars. a-2. What is the impact on 2020 net income

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Icebreaker Company (a U. S.-based company) sells parts to a foreign customer on December 1, 2020, wi...

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