AAA Ltd is a Singapore-incorporated company whose functional and presentation currency is Singapore Dollar (S$). BBB Bhd is a Malaysia-incorporated company whose functional and presentation currency is Ringgit Malaysia (RM). Both companies adopt 31 December accounting year-ends.
On 6 June 20x6, AAA Ltd and BBB Bhd signed a memorandum of understanding (MOU) under which AAA Ltd would subscribe for RM10 million of the 5-year, 5% coupon bonds to be issued by BBB Bhd at par on 31 December 20x6. On 6 June 20x6, the exchange rate was RM1.00 = S$0.30.
To hedge the foreign currency risk of the highly probable future transaction, AAA Ltd had, on 6 June 20x6, entered into a forward exchange contract to buy RM10 million on 31 December 20x6 at an exchange rate of RM1.00 = S$0.32.
On 31 December 20x6, the exchange rate was RM1.00 = S$0.35, and the forward exchange contract was duly settled. On the same date, in pursuant to the terms of the MOU, AAA Ltd paid RM10 million to acquire the bonds of BBB Bhd. AAA Ltd classified the investment as an “amortised cost” financial asset, in accordance with the provisions of FRS 109 Financial Instruments.
AAA Ltd wished to apply hedge accounting in 20x6. It chose to apply the hedge accounting requirements of FRS 39 Financial Instruments: Recognition and Measurement (instead of FRS 109), and complied with all the requirements of FRS 39 with respect to hedge accounting. It had designated the change in the fair value of the forward exchange contract based on the spot rate as a hedge against the foreign currency risks of the highly probable future transaction based on the spot rate.
On 1 January 20x7, AAA Ltd was concerned with the foreign currency risk of its investment in BBB Bhd’s bonds. To hedge the foreign exchange risk, AAA Ltd had, on 1 January 20x7, entered into a forward exchange contract to sell RM10 million on 31 December 20x7 at an exchange rate of RM1.00 = S$0.34 (assume that the exchange rate on 1 January 20x7 was the same as that on 31 December 20x6). However, AAA Ltd did not wish to apply hedge accounting in 20x7.
On 31 December 20x7, the exchange rate was RM1.00 =S$0.30. The average exchange rate for 20x7 was RM1.00 =S$0.33.
Interest on bond had been duly paid and received on 31 December 20x7.
Ignore the time value of money as it was not expected to be significant, and ignore tax effects, if any, arising from the above transactions and events.

Required question
Illustrate the accounting for hedge accounting and investment in foreign currency bonds by preparing all the relevant journal entries to record the transactions and events from 6 June 20x6 to 31 December 20x7 for AAA Ltd. Indicate clearly whether the gain/loss is recognised as “profit or loss” or as “other comprehensive income”.