Question 21 On 1 March 2018 Mohammed Ltd, a UAE company, places an order for US$1.5 million of inventory with Freight plc, a US supplier. The goods will be purchased FC out a foreign exchange forward-rate contract for US$1.5 million on 1 March 2018 with First Abu Dhabi Bank (FAB Bank) in which the bank agrees to supply Moha August 2018. The goods are shipped on 1 June 2018 on 1 June 2018 and are paid for on 1 August 2018. Additional information: Date 1 March 2018 1 June 2018 30 June 2018 1 August 2018 Spot rate 0.45 0.43 0.39 0.41 Forward rate 0.42 0.40 0.36 0.41 [a] In which currency is the transaction denominated? [5 Marks] [b] Provide the necessary accounting entries to record the above transactions from 1 March 2018 to 1 August 2018. [25 Marks] [c] Provide evidence of whether or not hedge accounting was effective in the above situation, assuming hedge effectiveness test is performed on the balance sheet date For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS Paragraph Arial XX T - + S 10pt 1T " v Ex ALIM MacBook Air BB 28 953