Icebreaker Company (a U.S.-based company) sells parts to a foreign customer on December 1, 2020, with payment of 29,000 dinars to be received on March 1, 2021. Icebreaker enters into a forward contract on December 1, 2020, to sell 29,000 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	$	4.70		$	4.775
December 31, 2020		4.80			4.900
March 1, 2021		4.95			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?

Journal entry worksheet Record the sales and foreign currency account receivable. Note: Enter debits before credits. General Journal Debit Credit Date 12/01/2020 Record entry Clear entry View general journal Journal entry worksheet N Record the forward contract. Note: Enter debits before credits. General Journal Debit Credit Date 12/01/2020 Record entry Clear entry View general journal Journal entry worksheet Record the change in the fair value of the forward contract. Note: Enter debits before credits. General Journal Debit Credit Date 12/31/2020 Record entry Clear entry View general journal Journal entry worksheet Record the amortization of the forward contract premium or discount. Note: Enter debits before credits. General Journal Debit Credit Date 12/31/2020 Record entry Clear entry View general journal Journal entry worksheet Record the entry to revalue the foreign currency account receivable. Note: Enter debits before credits. General Journal Debit Credit Date 03/01/2021 Record entry Clear entry View general journal Journal entry worksheet 1 2. 3 4 5 6 7 8 12 > Record the entry to adjust the carrying value of the forward contract to its current fair value. Note: Enter debits before credits. Date General Journal Debit Credit 03/01/2021 Record entry Clear entry View general journal Journal entry worksheet Req A1 Reg A2 to A4 Reg B1 Reg B2 to B4 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) Show less View transaction list Journal entry worksheet Record the sales and foreign currency account receivable. Note: Enter debits before credits. General Journal Debit Credit Date 12/01/2020 Record entry Clear entry View general journal 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) Show less View transaction list Journal entry worksheet Record the forward contract. Note: Enter debits before credits. General Journal Debit Credit Date 12/01/2020 Record entry Clear entry View general journal 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) Show less View transaction list Journal entry worksheet Record the entry to revalue the foreign currency account receivable. Note: Enter debits before credits. Date General Journal Debit Credit 12/31/2020 Record entry Clear entry View general journal 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) Show less View transaction list Journal entry worksheet Record the change in the fair value of the forward contract. Note: Enter debits before credits. Date General Journal Debit Credit 12/31/2020 Record entry Clear entry View general journal 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) Show less View transaction list Journal entry worksheet Record the foreign exchange gain or loss on the forward contract. Note: Enter debits before credits. Date General Journal Debit Credit 12/31/2020 Record entry Clear entry View general journal 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) Show less A View transaction list Journal entry worksheet Record the allocation of the premium or discount. Note: Enter debits before credits. Date General Journal Debit Credit 12/31/2020 Record entry Clear entry View general journal 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) Show less View transaction list Journal entry worksheet Record the entry to revalue the foreign currency account receivable. Note: Enter debits before credits. General Journal Debit Credit Date 03/01/2021 Record entry Clear entry View general journal 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) Show less View transaction list Journal entry worksheet Record the foreign exchange gain or loss on the forward contract. Note: Enter debits before credits. General Journal Debit Credit Date 03/01/2021 Record entry Clear entry View general journal 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) Show less View transaction list Journal entry worksheet Record the entry to adjust the carrying value of the forward contract to its current fair value. Note: Enter debits before credits. Date General Journal Debit Credit 03/01/2021 Record entry Clear entry View general journal 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) Show less View transaction list Journal entry worksheet Record the entry to adjust the net amount recognized as foreign exchange gain or loss to reflect the amortization of the forward contract premium or discount Note: Enter debits before credits. General Journal Debit Credit Date 03/01/2021 Record entry Clear entry View general journal 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) Show less View transaction list Journal entry worksheet