On December 1, 20X1, Sycamore Company acquired a 90-day speculative forward contract to sell 120,000 at a

On December 1, 20X1, Sycamore Company acquired a 90-day speculative forward contract to sell €120,000 at a forward rate of €1 = $0.58. The rates are as follows:

Required
a. Prepare a schedule showing the effects of this speculation on 20X1 income before income taxes.
b. Prepare a schedule showing the effects of this speculation on 20X2 income before incometaxes.

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Forward Rate Date SpotRate for March 1 1 $0.60 1 $0.58 December 1, 20X1 December 31, 20X March 1, 20X2 1 0.59 0.56 10.57