O 9-7

Icebreaker Company (a U.S.-based company) sells parts to a foreign customer on December 1, 2020, with payment of 16,000 dinars to be received on March 1, 2021. Icebreaker enters into a forward contract on December 1, 2020, to sell 16,000 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

$2.70

$2.775

December 31, 2020

2.80

2.900

March 1, 2021

2.95

N/A

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

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. What is the impact on 2020 net income? What is the impact on 2021 net income? What is the impact on net income over the two accounting periods?

please include the total i/s impact along with the entries

thanks

G H 1 Problem 31 (Ch.9), page 471 part a 14th ed. 4 Icebreaker Co sells parts to a foreign supplier on 12/1/20 with payment of 16,000 dinars to be received on 3/1/21. On 12/1/20, Icebreaker enters into a forward contract to sell 16,000 dinars on 3/1/21 7 Icebreaker closes its books and prepares financial statements at 12/31 3 10 Date 12/1/20 12/31/20 3/1/21 Spot Rate $2.70 2.80 2.95 Forward Rale to 11/21) $2.775 2.900 N/A Durat principal Currency IHL Scoal countries Or the Mediterzo Sca 14 15 16 (a) 17 10 19 Assume that Icebreaker designates the forward contract as a cash flow hedge of a foreign currency receivable. Prepntre journal entries for the sale and FC forward contract in L.S. dollars. What is the income impact on 2020, 2021, and over the two-year period? Total I/S Impact Account Name DR +/-) 20 CR Date 12/1/20 21 22 23 2 26 29 29 10 G H 1 Problem 31 (Ch.9), page 471 part a 14th ed. 4 Icebreaker Co sells parts to a foreign supplier on 12/1/20 with payment of 16,000 dinars to be received on 3/1/21. On 12/1/20, Icebreaker enters into a forward contract to sell 16,000 dinars on 3/1/21 7 Icebreaker closes its books and prepares financial statements at 12/31 3 10 Date 12/1/20 12/31/20 3/1/21 Spot Rate $2.70 2.80 2.95 Forward Rale to 11/21) $2.775 2.900 N/A Durat principal Currency IHL Scoal countries Or the Mediterzo Sca 14 15 16 (a) 17 10 19 Assume that Icebreaker designates the forward contract as a cash flow hedge of a foreign currency receivable. Prepntre journal entries for the sale and FC forward contract in L.S. dollars. What is the income impact on 2020, 2021, and over the two-year period? Total I/S Impact Account Name DR +/-) 20 CR Date 12/1/20 21 22 23 2 26 29 29 10