e) On December 1, Year 1, Sunny Company (a US-based company) purchased inventory totaling 1 million Mexican pesos and agreed to pay the vendor on March 1, Year 2. The following US dollar per peso exchange rates apply: Date Spot rate Forward Rate . (to March 1, Year 2) December 1, Year 1 December 31, Year 1 March 1, Year 2 $0.098 0.095 $0.086 $0.094 $0.089 Sunny's incremental borrowing rate is 12 percent. The present value factor for two months at an annual interest rate of 12 percent (1 percent per month) is 0.9763. e. 1) Assuming no forward contract was entered into, how much foreign exchange gain or loss should Sunny report on its December 31, Year 1 income statement with regard to this transaction? Assuming Sunny entered into a three-month forward contract to purchase 1 million Mexican pesos on March 1, Year2 e.2) Will Sunny report this forward contract as a liability or asset on its December 31, Year 1 balance sheet? e.3) What is the amount of the liability or asset on its December 31, Year 1 balance sheet