LO 11-3 P11-23A Comprehensive Problem: Four Uses of Forward Exchange Contracts without and with Time Value of Money Considerations On December 1, 20X1, Micro World, Inc., entered into a 120-day forward contract to purchase 100,000 Australian dollars (AS). Micro World's fiscal year ends on December 31. The direct exchange rates follow: Date Spot Rate Forward Rate for March 31, 20X2 December 1, 20X1 $0.600 $0.609 December 31, 20X1 0.610 0.612 January 30, 20X2 0.608 0.605 March 31, 20X2 0.602 Required Prepare all journal entries for Micro World, Inc., for the following independent situations: a. The forward contract was to manage the foreign currency risks from the purchase of furniture for A$100,000 on December 1, 20X1. with payment due on March 31, 20X2. The forward con- tract is not designated as a hedge. b. The forward contract was to hedge a firm commitment agreement made on December 1, 20X1. to purchase furniture on January 30, with payment due on March 31, 20X2. The derivative is designated as a fair value hedge. d. The forward contract was for speculative purposes only.