On October $1,2020,$ Mertag Company $($a U$.$S$.-$based company$)$ receives an order from a customer in Poland to deliver goods on January $31,2021,$ for a price of $1,030,000$ Polish zlotys $($PLN$).$ Mertag enters into a forward contract on October $1,2020,$ to sell PLN $1,030,000$ in four months $($on January $31,2021).$ U$.$S$.$ dollar$$Polish zloty exchange rates are as follows:

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DateSpot RateForward Rate

$($to January $31,2021)$October $1,2020$$$0\mathrm{.}26$$$0\mathrm{.}30$December $31,20200\mathrm{.}290\mathrm{.}33$January $31,20210\mathrm{.}31$N$/$A$$

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Mertag designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate, and, therefore, forward points are included in assessing hedge effectiveness. Mertag must close its books and prepare financial statements on December $31.$ Discounting to present value can be ignored.

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Prepare journal entries for the foreign currency forward contract, foreign currency firm commitment, and export sale.

Determine the net benefit, if any, realized by Mertag from entering into the forward contract.

exam hedging

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Several individual items on Stanford$$s financial records had fair values that differed from their book values as follows:

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$$Book Value$$Fair ValueTrade names $($indefinite life$)$$$253,300$$$371,100$Property and equipment $($net$,8-$year remaining life$)208,800227,200$Patent $(14-$year remaining life$)119,800152,000$

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For internal reporting purposes, Plaza, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December $31,2021,$ for both companies.

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$$Plaza$$StanfordRevenues$$(782,200)$$$(630,400)$Cost of goods sold$432,400278,800$Depreciation expense$183,30026,100$Amortization expense$019,900$Equity in income of Stanford$(240,800)0$Net income$$(407,300)$$$(305,600)$Retained earnings, $1/1/21$$$(898,300)$$$(372,900)$Net income$(407,300)(305,600)$Dividends declared$211,40023,000$Retained earnings, $12/31/21$$$(1,094,200)$$$(655,500)$Current assets$$605,900$$$304,200$Investment in Stanford$1,143,1000$Trade names$169,200253,300$Property and equipment $($net$)726,200182,700$Patents$099,900$Total assets$$2,644,400$$$840,100$Accounts payable$$(100,100)$$$(65,000)$Common stock$(211,400)(114,000)$Additional paid$-$in capital$(1,238,700)(5,600)$Retained earnings $($above$)(1,094,200)(655,500)$Total liabilities and equities$$(2,644,400)$$$(840,100)$

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At year$-$end, there were no intra$-$entity receivables or payables.