Icebreaker Company $($a U$.$S$.-$based company$)$ purchases materials from a foreign supplier on December $1,2020,$ with

payment of $34,000$ dinars to be made on March $1,2021.$ The materials are consumed immediately and recognized as

cost of goods sold at the date of purchase. On December $1,2020,$ Icebreaker enters into a forward contract to

purchase $34,000$ dinars on March $1,2021.$

Relevant exchange rates for the dinar on various dates are as follows:

a$-1.$ Assuming that Icebreaker designates the forward contract as a cash flow hedge of a foreign currency payable,

prepare journal entries for the import purchase 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 payable,

prepare journal entries for the import purchase and foreign currency forward contract in U$.$S$.$ dollars.

b$-2.$ What is the impact on net income in $2020$ and in $2021?$

b$-3.$ What is the impact on net income over the two accounting periods?

Complete this question by entering your answers in the tabs below.

b$-2.$ What is the impact on net income in $2020$ and in $2021?$

$b-3.$ What is the impact on net income over the two accounting periods?

$($Do not round intermediate calculations. Negative amounts should be entered with a minus

sign.$)$

Show less