Use the following information on the U.S. dollar value of the euro.

	Spot Rate	Forward Rate for April 30, 2021 Delivery
October 30, 2020	$ 1.250	$ 1.254
December 31, 2020	1.258	1.256
April 30, 2021	1.260	1.260

On October 30, 2020, a U.S. company forecasts that it will purchase merchandise from an Italian supplier at the end of April 2021, in the amount of €100,000, and will pay the supplier on delivery. On October 30, the company enters a forward contract to buy €100,000 on April 30, 2021 and classifies it as a cash flow hedge of the forecasted purchase. On April 30, 2021, the company receives the merchandise, closes the forward contract and pays the supplier. The company's accounting year ends December 31.

On December 31, 2020, how is the change in value of the forward contract reported?

 

Answer rating: 100% (QA)

To determine how the change in value of the forward contract is reported on December 31 2020 we need ... View the full answer