On July $1,2017$ a cotton wholesaler has $3$ million pounds of cotton inventory on hand at an average cost of $$1\mathrm{.}15$ per pound. To protect the inventory from a possible decline in cotton prices, the company sells cotton futures contracts for $3$ million pounds at $$1\mathrm{.}30$ a pound for delivery on October $31,2017$ to coincide with its expected physical sale of its cotton inventory. The Company designates the hedge as a fair value hedge $($i$.$e$.,$ The Company is hedging changes in the inventory$$s fair value, not changes in cash flows from anticipated sales.$).$