Question
On October 5, 2020, Kappa Cloth Ltd. enters into a forward contract to purchase 10,000 metres of cotton fabric at $1 per metre, good until
On October 5, 2020, Kappa Cloth Ltd. enters into a forward contract to purchase 10,000 metres of cotton fabric at $1 per metre, good until February 1, 2021. At December 31, 2020, the forward price for February 2021 delivery of cotton fabric has increased to $1.06 per metre. The adjusting entry at December 31, 2020 would be
a) DerivativesFinancial Assets/Liabilities............. 600
Gain or Loss on Derivatives............................................................ 600
b) Gain or Loss on Derivatives.................................................................. 600
DerivativesFinancial Assets/Liabilities..... 600
c) No entry required.
d) DerivativesFinancial Assets/Liabilities............. 600
Unrealized Gain or Loss (OCI)................................ 600
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