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Prepare the journal entry that would be required

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Question - On January 1, 2020, Blossom Inc. agrees to buy 3 kg of gold at $30,000 per kilogram from Golden Corp on April 1, 2020, but does not intend to take delivery of the gold. On the day that the contract was entered into, the fair value of this forward contract was zero. The fair value of the forward subsequently fluctuated as follows:

Date Fair Value of Forward Contract

January 20, 2020 $450

February 6, 2020 $120

February 28, 2020 $350

March 14, 2020 $700

On the settlement date, the spot price of gold is $31,000 per kilogram. Assume that Blossom complies with IFRS.

Prepare the journal entry for the day the forward contract was signed.

Prepare the journal entries to recognize the changes in the fair value of the forward contract.

Prepare the journal entry that would be required if Blossom settled the contract on a net basis on April 1, 2020.

Reference no: EM132982997

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