Noah Company (Noah) is a local company using Renminbi (RMB, ) as its functional currency. On October 1, 2022, Noah signed a binding agreement with Paige Limited to purchase a factory in the new emerging market Oakley for 4 million. Oakley Dollar (OD, ) is the local currency used in Oakley. According to the binding agreement, Noah would take title to the factory on March 31, 2023 and pay for it then.

The spot rate on October 1, 2022 was 0.440 : 1. Management of Noah expected that the OD would appreciate shortly. Thus, Noah entered into a three-month forward exchange contract to purchase 5 million on March 31, 2022 at the pre-determined rate 0.465 : 1. The first 4 million of the forward exchange contract qualifies for hedge accounting. It would be designated as a cash flow hedge of a firm commitment, with the forward contract being the hedging instrument. This hedge is assumed to be effective. The remaining 1 million of the forward exchange contract is purchased for speculation purposes.

The relevant exchange rates are as follows:

(a) Prepare necessary journal entries on October 1, 2022 and December 31, 2022 (financial year end of Noah)

(b) Show how the forward exchange contracts and its related account(s) would be reported in Noah's financial statements for the year ended on December 31, 2022.

(c) Determine the overall changes to the PPE account on March 31, 2023 concerning the settlement of the forward contract, the entitlement of the factory and the payment of the purchase.

Date Spot Rate Forward Rate Fair Value of forward (for March 31, exchange contract 2023) (per each 1,000) December 31,2022 0.472: 10.480: 114.6 March 31, 20230.490: \( 1 \quad 0.490: 1 \quad \Varangle 25 \)