On November 1, 2018, our company purchased a foreign-currency-denominated AFS debt security for 600,000. Our company plans to sell the security in three months (i.e., on January 31). The spot rate on the date the security is purchased is $1.29:1 and the company is concerned about the prospect of a strengthening $US that will reduce the $US fair value of the foreign-currency-denominated security. To hedge this risk, the company purchases a forward contract to sell 600,000 for $1.32:1 (the current forward rate) on January 31, 2019. Our U.S.-based company's functional currency is the $US. The spot and forward exchange rates and their effects on the recorded values of AFS security and the forward-contract derivative are summarized in the following table: FC AFS Security DerivativeForward Date Spot Rate ($US = 1) Carrying Value Change in Carry Val. Forward Ratea ($US = 1) FV Asset (Liability)b Change in FV November 1, 2018 1.29 $774,000 1.32 December 31, 2018 1.31 786,000 $12,000 1.33 $(6,000) $(6,000) January 31, 2019 1.34 804,000 18,000 1.34 (12,000) (6,000) a For settlement on January 31, 2019 b Ignore discounting in the computation of fair values. a. Prepare the journal entries to record the purchase and all adjustments required