Reference no: EM133031516

Question - On December 15, 20X6, Polar Inc. ordered €325,000 in inventory from a supplier in Italy and immediately entered into an FC to purchase €325,000 on the scheduled delivery date. The goods are scheduled to be delivered on January 15, 20X7, and payment in full is due at that time. The inventory was received and payment made on January 15. Polar's year end is December 31. Exchange rate information follows:

Date Spot rate Forward rate for delivery on January 15, 20X7

December 15, 20X6 €1 = C$1.40 €1 = C$1.3925

December 31, 20X6 €1 = C$1.38 €1 = C$1.3775

January 15, 20X7 €1 = C$1.35 €1 = C$1.3500

Assume that Polar designates the FC as a cash flow hedge. What the amount that will be recorded to inventory?

a) $438,750

b) $447,688

c) $452,563

d) $455,000