Icebreaker Company $($a U$.$S$.-$based company$)$ purchases materials from a foreign supplier on December $1,2023,$ with payment of $12,000$ dinars to be made on March $1,2024.$ The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December $1,2023,$ Icebreaker enters into a forward contract to purchase $12,000$ dinars on March $1,2024.$ Relevant exchange rates for the dinar on various dates are as follows:

Date Spot Rate Forward Rate $($to March $1,2024)$

December $1,2023$ $ $3\mathrm{.}00$ $ $3\mathrm{.}075$

December $31,20233\mathrm{.}103\mathrm{.}200$

March $1,20243\mathrm{.}25$ N$/$A

Required:

a$-1.$ Assuming that Icebreaker designates the forward contract as a cash flow hedge of a foreign currency payable, prepare journal entries for the import purchase and foreign currency forward contract in U$.$S$.$ dollars.

$1)$ Record the purchase of materials. $12/01/2023$

$2)$Record the forward contract. $12/1/2023$

$3)$Record the entry to revalue the foreign currency account payable. $12/31/2023$

$4)$Record the change in the fair value of the forward contract. $12/31/23$

$5)$Record the foreign exchange gain or loss on the forward contract. $12/31/23$

$6)$Record the entry to adjust the net amount recognized as foreign exchange gain or loss to reflect the amortization of the forward contract premium or discount$\mathrm{.}12/31/23$

$7)$Record the entry to revalue the foreign currency account receivable. $03/01/2024$

$8)$Record the entry to adjust the carrying value of the forward contract to its current fair value. $03/01/2024$

$9)$Record the foreign exchange gain or loss on the forward contract. $03/01/2024$

$10)$Record the entry to adjust the net amount recognized as foreign exchange gain or loss to reflect the amortization of the forward contract premium or discount. $03/01/2024$

$11)$Record the settlement of the forward contract. $03/01/2024$

$12)$Record the payment of dinars to the foreign supplier. $03/01/2024$

a$-2.$ What is the impact on $2023$ net income?

a$-3.$ What is the impact on $2024$ net income?

a$-4.$ What is the impact on net income over the two accounting periods?

b$-1.$ Assuming that Icebreaker designates the forward contract as a fair value hedge of a foreign currency payable, prepare journal entries for the import purchase and foreign currency forward contract in U$.$S$.$ dollars.

b$-2.$ What is the impact on net income in $2023$ and in $2024?$

b$-3.$ What is the impact on net income over the two accounting periods?