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On January 1, 2017, Cullumber Inc. agrees to buy 3 kilos of gold at $39,000 per kilo from Golden Corp on April 1, 2017, but

On January 1, 2017, Cullumber Inc. agrees to buy 3 kilos of gold at $39,000 per kilo from Golden Corp on April 1, 2017, but does not intend to take delivery of the gold. On the day that the contract was entered into, the fair value of this forward contract was zero. The fair value of the forward subsequently fluctuated as follows:

Date Fair Value of Forward Contract
January 20, 2017 $546
February 6, 2017 $124
February 28, 2017 $362
March 14, 2017 $730

On the settlement date, the spot price of gold is $40,000 per kilo. Assume that Cullumber complies with IFRS.

Prepare the journal entry for the day the forward contract was signed.

Prepare the journal entries to recognize the changes in the fair value of the forward contract.

Prepare the journal entry that would be required if Cullumber settled the contract on a net basis on April 1, 2017.

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