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First screeenshot is from part A. The second is from part B. Need all the figures Icebreaker Company (a U.S.-based company) sells parts to a
First screeenshot is from part A. The second is from part B. Need all the figures
Icebreaker Company (a U.S.-based company) sells parts to a foreign customer on December 1, 2020, with payment of 25,000 dinars to be received on March 1, 2021. Icebreaker enters into a forward contract on December 1, 2020, to sell 25,000 dinars on March 1, 2021. The forward points on the forward contract are excluded in assessing hedge effectiveness and are amortized to net income using a straight-line method on a monthly basis. Relevant exchange rates for the dinar on various dates are as follows: Date December 1, 2020 December 31, 2020 March 1, 2021 Spot Rate $ 4.30 4.40 4.55 Forward Rate (to March 1, 2021) $ 4.375 4.500 N/A Icebreaker must close its books and prepare financial statements at December 31. a-1. Assuming that Icebreaker designates the forward contract as a cash flow hedge of a foreign currency receivable, prepare journal entries for the sale and foreign currency forward contract in U.S. dollars. a-2. What is the impact on 2020 net income? a-3. What is the impact on 2021 net income? a-4. What is the impact on net income over the two accounting periods? b-1. Assuming that Icebreaker designates the forward contract as a fair value hedge of a foreign currency receivable, prepare journal entries for the sale and foreign currency forward contract in U.S. dollars. b-2. What is the impact on 2020 net income? b-3. What is the impact on 2021 net income? b-4. What is the impact on net income over the two accounting periods? 3 12/31/2020 2,500 Accounts receivable (dinars) Foreign Exchange Gain or Loss 2,500 4 12/31/2020 Other comprehensive income Forward contract 5 12/31/2020 Foreign Exchange Gain or Loss Other comprehensive income 6 12/31/2020 Other comprehensive income Foreign Exchange Gain or Loss Oo 7 03/01/2021 Accounts receivable (dinars) Foreign Exchange Gain or Loss 8 03/01/2021 Other comprehensive income Forward contract 9 03/01/2021 Foreign Exchange Gain or Loss Other comprehensive income 10 03/01/2021 Other comprehensive income Foreign Exchange Gain or Loss 11 03/01/2021 Foreign currency (dinars) Accounts receivable (dinars) 12 03/01/2021 Cash Forward contract Foreign currency (dinars) No Date General Journal Debit Credit 1 12/01/2020 Accounts receivable (dinars) Sales o 2 12/01/2020 No journal entry required 3 12/31/2020 Accounts receivable (dinars) Foreign Exchange Gain or Loss 4 12/31/2020 Foreign Exchange Gain or Loss Forward contract 5 12/31/2020 > No journal entry required 6 12/31/2020 Other comprehensive income Foreign Exchange Gain or Loss 7 03/01/2021 Accounts receivable (dinars) Foreign Exchange Gain or Loss 8 03/01/2021 > No journal entry required 9 03/01/2021 Foreign Exchange Gain or Loss Forward contract 10 03/01/2021 Foreign Exchange Gain or Loss Accumulated other comprehensive income 11 03/01/2021 Foreign currency (dinars) Accounts receivable (dinars)Step by Step Solution
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