Icebreaker Company (a U.S.-based company) sells parts to a foreign customer on December 1, 2020, with payment of 33,000 dinars to be received on March 1, 2021. Icebreaker enters into a forward contract on December 1, 2020, to sell 33,000 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	Spot Rate			Forward Rate (to March 1, 2021)
December 1, 2020	$	5.10		$	5.175
December 31, 2020		5.20			5.300
March 1, 2021		5.35			N/A

Icebreaker must close its books and prepare financial statements at December 31.

1. 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.

2. b-2. What is the impact on 2020 net income?

3. b-3. What is the impact on 2021 net income?

4. b-4. What is the impact on net income over the two accounting periods?

1 12/01/2020 Accounts receivable (dinars) 168,300 olo Sales 168,300 2 12/01/2020 No journal entry required 3 12/31/2020 3,300 > Accounts receivable (dinars) Foreign Exchange Gain or Loss 3,300 > 4 12/31/2020 x 4,125 Accumulated other comprehensive income Forward contract 4,125 5 12/31/2020 3,300 X Foreign Exchange Gain or Loss Other comprehensive income 3,300 > 6 12/31/2020 825 X Other comprehensive income Foreign Exchange Gain or Loss 825 x 7 03/01/2021 4,950 > Accounts receivable (dinars) Foreign Exchange Gain or Loss 4,950 > 8 03/01/2021 4,950 x Foreign Exchange Gain or Loss Other comprehensive income 4,950 x 9 03/01/2021 Accumulated other comprehensive income 1,650 8 > Forward contract 1,650 1 12/01/2020 Accounts receivable (dinars) 168,300 olo Sales 168,300 2 12/01/2020 No journal entry required 3 12/31/2020 3,300 > Accounts receivable (dinars) Foreign Exchange Gain or Loss 3,300 > 4 12/31/2020 x 4,125 Accumulated other comprehensive income Forward contract 4,125 5 12/31/2020 3,300 X Foreign Exchange Gain or Loss Other comprehensive income 3,300 > 6 12/31/2020 825 X Other comprehensive income Foreign Exchange Gain or Loss 825 x 7 03/01/2021 4,950 > Accounts receivable (dinars) Foreign Exchange Gain or Loss 4,950 > 8 03/01/2021 4,950 x Foreign Exchange Gain or Loss Other comprehensive income 4,950 x 9 03/01/2021 Accumulated other comprehensive income 1,650 8 > Forward contract 1,650