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. T

he adjusting entry at December 31, 2020 would be:

DerivativesFinancial Assets/Liabilities.............	600
Gain or Loss on Derivatives............................................................		600

DerivativesFinancial Assets/Liabilities.............	600
Unrealized Gain or Loss (OCI)................................		600

No entry required.

Gain or Loss on Derivatives..................................................................	600
DerivativesFinancial Assets/Liabilities.....		600