Icebreaker Company (a U.S.-based company) sells parts to a foreign customer on December 1, 2023, with payment of 19,000 dinars tobe received on March 1, 2024. Icebreaker enters into a forward contract on December 1, 2023, to sell 19,000 dinars on March 1, 2024.The forward points on the forward contract are excluded in assessing hedge effectiveness and are amortized to net income using astraight-line method on a monthly basis. Relevant exchange rates for the dinar on various dates are as follows:DateDecember 1, 2023December 31, 2023March 1, 2024Spot Rate$ 3.703.803.95Forward Rate (toMarch 1, 2024)$ 3.7753.900N/AIcebreaker must close its books and prepare financial statements at December 31.Assuming that Icebreaker designates the forward contract as a fair value hedge of a foreign currency receivable, preparejournal entries for the sale and foreign currency forward contract in U.S. dollars.Note: If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not roundintermediate calculations.b-2. What is the impact on 2023 net income?b-3. What is the impact on 2024 net income?b-4. What is the impact on net income over the two accounting periods?Note: For all requirements, do not round intermediate calculations. Negative amounts should be entered with a minussign.b-2. Impact on 2023 net incomeb-3. Impact on 2024 net incomeb-4. Impact on net income over 2023 and 2024Show less

Icebreaker Company (a U.S.-based company) sells parts to a foreign customer on December 1, 2023, with payment of 19,000 dinars to be received on March 1, 2024. Icebreaker enters into a forward contract on December 1, 2023, to sell 19,000 dinars on March 1, 2024. The forward points on the forward contract are excluded in assessing hedge effectiveness and are amortized to net income using a straight-line method on a monthly basis. Relevant exchange rates for the dinar on various dates are as follows: Date December 1, 2023 December 31, 2023 March 1, 2024 Spot Rate $ 3.70 3.80 3.95 Forward Rate (to March 1, 2024) $ 3.775 3.900 N/A

Icebreaker Company (a U.S.-based company) sells parts to a foreign customer on December 1, 2023, with payment of 19,000 dinars to be received on March 1, 2024. Icebreaker enters into a forward contract on December 1, 2023, to sell 19,000 dinars on March 1, 2024. The forward points on the forward contract are excluded in assessing hedge effectiveness and are amortized to net income using a straight-line method on a monthly basis. Relevant exchange rates for the dinar on various dates are as follows: Date December 1, 2023 December 31, 2023 March 1, 2024 Spot Rate $ 3.70 3.80 3.95 Forward Rate (to March 1, 2024) $ 3.775 3.900 N/A

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 22PC

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prepare table showing gain/loss on the hedging instrument and provide journal entries for paradise ltd. to account for the hedge.
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