On October 1, 20x20, 5J Inc. sold on account an inventory to a US-based company at a price of $5,000 collectible on January 30, 20x21. On November 1, 20x20, 5J purchased on account an inventory to a US-based company at a price of $8,000 payable on March 2, 20x21.

On October 1, 20x20, in order to hedge the foreign currency risk related to its foreign currency denominated account receivable, 5J acquired a 120-day put options from RCBC to sell $5,000 at a strike price of P40 by paying option premium of P500. On November 1, 20x20, in order to hedge the foreign currency risk related to its foreign currency denominated account payable, 5J acquired a 120-day call option from RCBC to buy $8,000 at an option price of P41 by paying option premium of P600.

The following additional data are provided:

	10/1/20x20	11/1/20x20	12/31/20x20	1/30/20x21	3/2/20x21
Buying spot rate	P40	P38	P36	P37	P39
Selling spot rate	P39	P41	P44	P41	P42
Fair value of put option	?	?	P23,000	?	?
Fair value of call option	?	?	P25,000	?	?

What is the net foreign currency gain or loss as a result of hedging activity to be reported by 5J Inc. for the year end December 31, 20x20?

What is the net foreign currency gain or loss in other comprehensive income of statement of comprehensive income for the year ended December 31, 20x20?

Answer rating: 100% (QA)

44000 net gin Exlntin tin rie 41 Buying St Rte De 31 ... View the full answer