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Icebreaker Company (a U.S.-based company) purchases materials from a foreign supplier on December 1, 2020, with payment of 30,000 dinars to be made on March 1, 2021. The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December 1, 2020, Icebreaker enters into a forward contract to purchase 30,000 dinars on March 1, 2021. Relevant exchange rates for the dinar on various dates are as follows: DateSpot RateForward Rate (to March 1, 2021) December 1, 2020$4.80 $4.875 December 31, 2020 4.90 5.000 March 1, 2021 5.05 N/Aa-2. What is the impact on 2020 net income?

Sagot :

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