On October 5, 2020, Kappa Cloth Ltd

question 51

Multiple Choice

On October 5, 2020, Kappa Cloth Ltd. enters into a forward contract to purchase 10,000 metres of cotton fabric at $ 1 per metre, good until February 1, 2021. At December 31, 2020, the forward price for February 2021 delivery of cotton fabric has increased to $ 1.06 per metre. The adjusting entry at December 31, 2020 would be

• A) No entry required.
• B) Derivatives-Financial Assets/Liabilities    600
• Unrealized Gain or Loss (OCI)    600
• C) Derivatives-Financial Assets/Liabilities    600
• Gain or Loss on Derivatives    600
• D) Gain or Loss on Derivatives    600
• Derivatives-Financial Assets/Liabilities    600