DERIVATIVES PROBLEM D StanVonderHarr & Co. designated the risk being hedged as its cash flows related to a forecasted sale of 100,000 bushels of corn (the bushels originally were acquired for a cost of $930,000). In late December of year 1, StanVonderHarr sells a futures contract to deliver 100,000 bushels at the expected selling price of $1 million in the first several days of year 2. At hedge inception, the derivative is at-the-money (i.e., its fair value was zero). At the end MOORE NOTES: DERIVATIVES 37 of year 1, the futures contract had a fair value of $50,000, and the fair value of the inventory had increased by $50,000. In early year 2, the 100,000 bushels of corn were sold for $1,050,000. Also, in early year 2, the futures contract was settled. Finally, assume that the hedge has no ineffectiveness because all terms of the forecasted sale and the futures contract match. REQUIRED: (1) Show all entries, assuming it is a cash flow hedge. Also show the partial balance sheet and income & comprehensive income statement for years 1 and 2. (2) Now assume instead that StanVonderHarr & Co. designated this as a fair value hedge. What would the accounting (i.e., entries and financial reports) be in this case? (3) Do companies have preferences between the two types of accounting