Rowing Ltd is a New Zealand importer and purchases inventory from France. The importer

wants to limit the effect of currency fluctuations in the next year, by hedging forecasted Euro$-$

denominated purchases. It expects to purchase Euro $1,200,000$ of inventory on $31$ July $2024,$

and it expects to pay its supplier on $31$ October $2024.$ Therefore, on $31$ July $2023$ it enters into

a fifteen$-$month forward contract with the bank to buy Euro $1,200,000$ and pay the bank the

agreed number of NZ dollars on $31$ October $2024($at a forward rate of NZ$$1=$ Euro $0\mathrm{.}5).$

You can assume that the goods of Euro $1,200,000$ were purchased on $31$ July $2024$ according

to the plan. Also assume that this is an effective cash flow hedge and the change in fair value

of the forward contract before the forecast purchase is $100\%$ effective, under NZ IFRS $9.$

Relevant exchange rates $($i$.$e$.,$ spot rates and forward rates for $31$ October $2024$ delivery of

cash$)$ for transaction dates and balance dates $(30$ September$)$ are provided in the table below.

Required: In accordance with NZ IFRS $9,$ show all workings clearly:

$($a$)$ Provide all necessary journal entries for the following dates:

$31$ July $2023$

$30$ September $2023$

$31$ July $2024$

$30$ September $2024$

$31$ October $2024$

NOTE: Clearly indicate if the gain$/$loss goes to P&L account or OCl account, and provide brief

narrations for the journal entries.

$($b$)$ Calculate the overall gain or loss from both the accounts payable and forward

contract.

$($c$)$ Provide an overall position check for total cash payment.