QUESTION 9 Company A prepares annual financial statements at December 31. Company A purchased inventory from a French supplier on December 1, Year1 for 100.000 euros. Company A pays for the inventory on March 31, Year2. The inventory is sold on May 1, Year2. Relevant exchange rate information for Euros are as follows. Spot rate Forward rate to 3/31 December 1, Year1 1.01 1.05 December 31, Year 1 1.04 1.06 March 31, Year2 1.10 1.10 Assume that on 12/1, Year1 Company A enters into a forward contract to purchase 100.000 euros at 1.05 The present value factor for 4 months at Company A's borrowing rate is .965 The present value factor for 3 months at Company A's borrowing rate is .970 1. How will the forward contract be reported on the balance sheet at 12/31/Year1. In the answer box, Type just the LETTER from the list below that matches your computation. C A. Zero-Not on balance sheet B. 1,000 liability C. 102,820 asset D. 106,000 asset E. 3,000 liability F. 970 asset G. 2,910 asset H. 965 liability 2. What amount will be in the Forward contract account at 3/31/Year2 just before the account payable is paid off? In the answer box, Type just the LETTER from the list below that matches your computation. B A. Zero. Not on balance sheet B. 110.000 C. 4,030 D. 5,000 E. 4.000 F. 8,000 3.Assume Company A designates the contract as a fair value hedge. What is the total impact on net income in each year as a result of the foreign currency fluctuation? (Combine all of the accounts that effect net income: foreign currency gainvloss, forward contract gain loss, and premium or discount revenue/expense) Do not include the May 1 transaction Put a G after your numeric answer for a gain. Put an L after your numeric answer for a loss Example: 1200G is a 1200 gain Year1: 4030 Year2: 4030 4.Assume Company A designates the contract as a cash flow hedge. What is the total impact on net income in each year as a result of the foreign currency fluctuation? (Combine all of the accounts that effect net income: foreign currency gainvloss, forward contract gain loss, and premium or discount revenue/expense) Do not include the May 1 transaction Put a G after your numeric answer for a gain. Put an L after your numeric answer for a loss Example: 1200G is a 1200 gain Year 1 : 4030 Year2: 4030