On September 10, 2020, Metlock Corporation, a publicly traded company, purchased 1,000 common shares in MNL Ltd at a cost of $26.30 per share. The number of shares purchased was not a significant percentage of MNLs ownership, and Metlock designated the investment as fair value through other comprehensive income (FV-OCI) under IFRS. Concerned about the inherent risk of losing value through the change in market price of the shares, Metlock immediately purchased an option to sell the MNL shares for $26,300. The option cost $2,600. On September 30, 2020, Metlock prepared its quarterly financial statements. On that day, the MNL shares were trading at $28.40 per share. The options, on the other hand, were trading at $490.

a. Prepare the necessary journal entries to record the above events.

(To record purchase of shares.)

(To record purchase of hedge option.)

(To record fair value adjustment of shares.)

(To record fair value adjustment of options.)

(To record the fix under hedge accounting.)

b. Is this a fair-value hedge or a cash flow hedge, from Metlocks perspective?

This a ________ from Metlock's perspective.

cash-flow hedge or fair value hedge.