Icebreaker Company (a U.S.-based company) purchases materials from a foreign supplier on December 1, 2020, with payment of 18,000 dinars to be made on March 1, 2021. The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December 1, 2020, Icebreaker enters into a forward contract to purchase 18,000 dinars on March 1, 2021. Relevant exchange rates for the dinar on various dates are as follows:   Date Spot Rate Forward Rate (to March 1, 2021) December 1, 2020 $ 3.60   $ 3.675   December 31, 2020   3.70     3.800   March 1, 2021   3.85     N/A       a-2. What is the impact on 2020 net income? a-3. What is the impact on 2021 net income? a-4. What is the impact on net income over the two accounting periods?

On 1 July 2018 an Australian company lent to its New Zealand subsidiary an amount of NZ$2.5 million for a period of six years. At the time the exchange rate was A$1 5 NZ$1.13. Assume the exchange rate was A$1 5 NZ$1.09 on 30 June 2019, while on 30 June 2020 the exchange rate was A$1 5 NZ$1.02. Required Prepare the general journal entries to record the above events for the first two years of the loan, following the requirements of AASB 121. Be careful to specify any assumptions you make. (Lo2, Lo3)

On October 1, 2020, Mertag Company (a U.S.-based company) receives an order from a customer in Poland to deliver goods on January 31, 2021, for a price of 1,004,000 Polish zlotys (PLN). Mertag enters into a forward contract on October 1, 2020, to sell PLN 1,004,000 in four months (on January 31, 2021). U.S. dollar–Polish zloty exchange rates are as follows:   Date Spot Rate Forward Rate(to January 31, 2021) October 1, 2020 $ 0.27   $ 0.31   December 31, 2020   0.30     0.34   January 31, 2021   0.32     N/A       Mertag designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate, and, therefore, forward points are included in assessing hedge effectiveness. Mertag must close its books and prepare financial statements on December 31. Discounting to present value can be ignored.   Prepare journal entries for the foreign currency forward contract,…