1. Create your own specific and detailed example of foreign exchange options to hedge an anticipated purchase of inventory of these types of foreign exchange options from the beginning of the use of an option to the end of the use or the settlement of the option over a three-month period of time:
2. Show the required journal entries required at each respective date during the three-month period, including an explanation of the basis of each of your journal entry calculations and the authoritative support for each entry following the US GAAP.
3. Make sure your journal entries are clear with regards to which financial statement account is affected by each of your journal entries (Balance Sheet, Income Statement, Other Comprehensive Income, etc.).