Answer (B) is correct . The equipment should be recorded at $360,000. This amount equals $390,000 (FC1,000,000 x $0.39 spot rate at 2/15/Yr 2) minus the $30,000 ($19,600
Answer (A) is incorrect because The amount that would have been recognized if the equipment had been delivered on 11/15/Yr 1 is $350,000.
Answer (C) is incorrect because The amount that would have been recognized if the firm commitment had not been hedged is $390,000.
Answer (D) is incorrect because The amount of $420,000 equals $390,000 plus the $30,000 balance in the firm commitment liability account.
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As a result of this hedging transaction, at what amount should Hector recognize the equipment on February 15, Year 2?
