Assuming that Brandt entered into a forward contract to sell 10 million South Korean won on December 1, 2020, as a fair value hedge of a foreign currency receivable, what is the net impact on its net income in 2020 resulting from a fluctuation in the value of the won? Brandt amortizes forward points on a monthly basis using a straight-line method. Ignore present values.

a. No impact on net income

b. $100 decrease in net income

c. $250 decrease in net income

d. $2,000 increase in net income

Brandt Corp. (a U.S.-based company) sold parts to a South Korean customer on December 1, 2020, with
payment of 10 million South Korean won to be received on March 31, 2021. The following exchange
rates apply:

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Forward Rate Date Spot Rate (to March 31, 2021) December 1, 2020 $0.0035 $0.0034 December 31, 2020 0.0033 0.0032 March 31, 2021 0.0038 N/A