On 15 November 2020, Merci entered into a Singapore ringgit forward contract, to hedge the foreign currency risk attached to a large power tool inventory order. The relationship between the power tool order and the forward contract was designated as a fair value hedge. At year end the hedge has been assessed as effective, in line with hedge accounting requirements under AASB 9. The inventory was due to be received on 31 January 2021.

	Unrecognised firm commitment(fair value of purchase order)	Fair value of forward contract
15.11.2020	($800,000)	($ 0) at inception
31.12.2020	($900,000)	$75,000 asset

Required

1. Record the journal entry for the year ended 31.12.20 (narrations are required).
2. ( 6 marks)