FutureHolding Ltd holds a well-diversified portfolio of shares with a current market value on 1 July 2021 of $3 million. On this date, FutureHolding Ltd decides to hedge the portfolio by taking a sell position in 10 ASX SPI200 futures units.

1 July 2021 The ASX SPI200 index futures is 6,550. Each contract unit is valued at $50 per index point (e.g., when the index is 6,550, the total price of the futures contract is calculated as 6,550 x 10 x $50 =$3,275,000). The futures broker requires a deposit of $300,000.

1 September 2021 The ASX SPI200 index futures has fallen to 6,500 and the value of the company's share portfolio has fallen to $2,990,000.

1 December 2021 FutureHolding Ltd decides to sell its shares and close out its futures contract. At this date the portfolio has a market value of $2,985,000 and the ASX SPI200 index futures is 6,510.

Assume all entries have been made mark to market on the futures contract.

Question:

a) The journal entries required to record the above hedging transactions from 1 July through to 1 December 2021 for FutureHolding Ltd in accordance with AASB 9 Financial Instruments. Exclude journal narrations.

b) What rates should be used to translate the expense and income items of a foreign entity's financial statements? When would average rates be acceptable?