On November 30, 2020, Walter Corporation (a U.S.-based company) forecasts the sale of equipment to a foreign customer at a price of 500,000 crowns. The equipment is expected to be delivered on January 31, 2021, with payment received upon delivery. Also on November 30, 2020, Walter pays $3,000 for an option to sell 500,000 crowns on January 31, 2021, at a strike price of $0.52. Walter properly designates its foreign currency option as a cash flow hedge of a forecasted foreign currency transaction. The time value of the option is excluded in assessing hedge effectiveness, and the change in time value is recognized in net income over the life of the option. The following U.S. dollar-crown exchange rates apply: