UHN uses titanium as a component of its products. It buys Titanium in dollars. On 1 November 2022 the UHN finance director and production director agreed that, in April 2023, UHN would need to buy a consignment of titanium for $15,000,000. This would ensure that the company would have sufficient titanium for production. In fixing this dollar ($) price of $15,000,000 the finance director worked on the basis of the spot exchange rate of $1.50 = 1, so that cost would be fixed 10,000,000. On 1 November 2022, to ensure it paid 10,000,000 on 30 April 2023 for the titanium, UHN took out a six-month forward contract to buy $15,000,000 and pay 10,000,000. On 1 November 2022, the finance director documented the forward contract as a hedging instrument against the purchase of titanium but was unsure about whether this was a cashflow or fair value hedge. On 31 December 2022, the value of $15,000,000 had depreciated and had an equivalent sterling value of 9,100,000. No adjustments have been made in the draft financial statements for the year ended 31 December 2022 in respect of this forward contract. You and your group members work for FAR, a firm of accountants. You have recently been asked to advise the board of UHN plc (UHN), an AIM-listed company on financial reporting matters. UHN has a 31 December year end and prepares its financial statements under IFRS. UHN manufactures wing parts for the aircraft industry. Titanium metal is an important raw material for its products. Your manager gives you the following briefing: "The finance director needs to ensure that the results for the year ended 31 December 2022 meet the market expectations of profit of 6.5 million and also the covenants imposed by its bank. "The UHN finance director has provided details of the bank loan covenants and prepared some draft financial statements for the year ended 31 December 2022 (Exhibit 1). "The financial statements are incomplete because he is unsure about the financial reporting treatment of two issues (Exhibit 2 Issue 1 Forward contract and Issue 2 Contract with JJ Ltd). "I would like you to prepare a working paper for me to advise the finance director in finalising the financial statements. I have set out below what I require you to do. (Please ignore any adjustments for deferred tax and current tax I will deal with these later). REQUIRED: REQUIRED: a) In respect of Issue 1 Forward contract: Explain the possible IFRS treatments of the forward contract. Set out and explain how UHN should recognise the forward contract at 31 December 2022 assuming it wishes to minimise the impact of any adjustment(s) on the profit for the year ended 31 December 2022. Include journal entry(ies). (Suggested word count 200 - 400 words)