63. What is the intrinsic value (IV) and time value (TV) of option on December 31, 2017? 64. The foreign exchange gain on option contract (hedging instrument) on June 30, 2017 to be recognized in current earnings should be 65. The foreign exchange gain on option contract (hedging instrument) on June 30, 2017 to be recognized in OCI should be 66. The foreign exchange gain or loss on current earnings on December 31, 2017 should be Hedging a Forecasted Purchases Transaction - Hedge Accounting Applies (Split Accounting: Exclude the time value element is assessing hedge effectiveness) On June 1, the company forecasted the purchase of 5,000 units of inventory from a foreign vendor. The purchase would probably occur on September 1 and require the payment of 100,000 foreign currencies (FC). It is anticipated that the inventory could be further processed and delivered to customers by early October. On June 1,, the company purchased a call option to buy 100,000 FC at a strike (option) price of 1FC = P0.55 during September. An option premium of P900 was paid. Changes in the value of the option will be excluded from the assessment of hedge effectiveness. Spot rates, strike price and option values are as follows: June 1 June 30 July 31 September 1 Spot rate (market price) P0.53 P0.552 P0.57 P0.575 Strike price (exercise price) |0.55 0.55 0.55 0.55 Fair value of call option P900 P1,350 P2,400 P2,600 On September 1, the company purchased 5,000 units of inventory at a cost of 103,000 FC. The option was settled/sold on September 1 at its fair value of P2,600. After incurring further processing costs of P20,000, the inventory was sold for P95,000 on October 5. 67. The foreign exchange gain on option contract (hedging instrument) on June 30 is OCI; Earnings. 68. The foreign exchange gain (loss) on option contract (hedging instrument) on July 31 is OCI; Earnings 69. The foreign exchange gain (loss) on option contract (hedging instrument) on September 1 is OCI; Earnings. 70. The cost of inventory that was sold on October 5 is