Cash flow hedge of anticipated purchase of inventory

L02 29, Cash flow hedge of anticipated purchase of inventory We are a manufacturingc pect to acquire at least 200 ounces of gold in April and, to mitigate the risk of a price rise in we purchase two at-the-money spot April $291/oz. call options for a premium of $7.50 an since (each call option is for a notional amount of 100 ounces of gold). The relevant data are as lous ompany that uses gold in the production of our products. In January, we e ounce each Hedging Instrument and Commodity Price Date Gold Spot Price $291 $316 Option Strike Price Option Premium January.... $291 $7.50 a. Discuss the economic rationale for the purchase of the call options. b. Compute the options' time value and intrinsic value at January and April. c. Will we account for this hedge as a fair value hedge or a cash flow hedge? d. Describe the accounting for the options' time value and intrinsic values. e. Describe the accounting for unrealized gains or losses on the call option