Icebreaker Company (a U.S.-based company) sells parts to a foreign customer on December 1, 2020, with payment of 30,000 dinars to be received on March 1, 2021. Icebreaker enters into a forward contract on December 1, 2020, to sell 30,000 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	$	4.80		$	4.875
December 31, 2020		4.90			5.000
March 1, 2021		5.05			N/A

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

1. 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.

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

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

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

5. 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.

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

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

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

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

10. Req A1
11. Req A2 to A4

12. 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)

14. 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? (Negative amounts should be entered with a minus sign. Do not round intermediate calculations.)

    Show less

    a-2.	Impact on 2020 net income
    a-3.	Impact on 2021 net income
    a-4.	Impact on net income over 2020 and 2021

16. Journal entry worksheet

17. .....

18. Record the sales and foreign currency account receivable.

19. Note: Enter debits before credits.

    Date	General Journal	Debit	Credit
    12/01/2020

    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? (Do not round intermediate calculations. Negative amounts should be entered with a minus sign.)

20. Record the forward contract.

22. Note: Enter debits before credits.

    Date	General Journal	Debit	Credit
    12/01/2020

    Show less

    b-2.	Impact on 2020 net income
    b-3.	Impact on 2021 net income
    b-4.	Impact on net income over 2020 and 2021

26. Req B1
27. Req B2 to B4