On March 1, 2011, Amber Company sold goods to a foreign customer at a price of 50,000 foreign currency units.The customer will pay in three months.At the time of the sale, Amber paid $2,000 to acquire an option to sell 50,000 foreign currency units in three months at the strike price of $0.39.On May 30, 2011, the customer sent in 50,000 foreign currency units.Quarterly financial reports are prepared on March 31.Ignore the time value of money.Relevant exchange rates are as follows:
Required:
Prepare the journal entries required for these transactions, if the foreign currency option is designated as a fair value hedge.

Question

On March 1, 2011, Amber Company sold goods to a foreign customer at a price of 50,000 foreign currency units.The customer will pay in three months.At the time of the sale, Amber paid $2,000 to acquire an option to sell 50,000 foreign currency units in three months at the strike price of $0.39.On May 30, 2011, the customer sent in 50,000 foreign currency units.Quarterly financial reports are prepared on March 31.Ignore the time value of money.Relevant exchange rates are as follows:
  Required:
Prepare the journal entries required for these transactions, if the foreign currency option is designated as a fair value hedge.

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The Answer of On March 1, 2011, Amber Company sold goods to a foreign customer at a price of 50,000 foreign currency units.The customer will pay in three months.At the time of the sale, Amber paid $2,000 to acquire an option to sell 50,000 foreign currency units in three months at the strike price of $0.39.On May 30, 2011, the customer sent in 50,000 foreign currency units.Quarterly financial reports are prepared on March 31.Ignore the time value of money.Relevant exchange rates are as follows:
  Required:
Prepare the journal entries required for these transactions, if the foreign currency option is designated as a fair value hedge.

On March 1, 2011, Amber Company Sold Goods to a Foreign