On 1 July 2020, ABC Ltd purchased an inventory of cardboard boxes for US$100 000 on credit which is payable on 1 Oct 2020. The CFO was concerned about the impact of the adverse exchange rate movements on the fair value of the payable arising from the purchase of inventory. ABC Ltd entered into a forward rate agreement with the Commonwealth Bank on 1 July 2020 to purchase US$100 000 on 1 Oct 2020. ABC Ltds report date is 30 June. The following exchange rates are applicable:

Soas Company has designed the hedging arrangement as a fair value hedge, which qualifies for hedge accounting in accordance with AASB 9 Financial Instruments. It is 100% effective.

Prepare the general journal entries to record these transactions at various dates in ABC Ltds books in accordance with the requirements of AASB 9 Financial Instruments. Show all calculations. Provide any necessary explanation to support your answer. No narration is required. Round answers to the nearest Australian dollar.

2020 Spot rate Forward rate for delivery of $100 000 on 1 Oct 30 June A$1.00=US$0.82 A$1.00=US$0.78 1 July A$1.00=US$0.78 A$1.00=US$0.75 1 Oct A$1.00=US$0.85 A$1.00=US$0.85 2020 Spot rate Forward rate for delivery of $100 000 on 1 Oct 30 June A$1.00=US$0.82 A$1.00=US$0.78 1 July A$1.00=US$0.78 A$1.00=US$0.75 1 Oct A$1.00=US$0.85 A$1.00=US$0.85