Fundamentals of Advanced Accounting 5th Edition by Joe Ben Hoyle,Thomas Schaefer,Timothy Doupnik

Exercise 35

On February 1, 2013, Linber Company forecasted the purchase of component parts on May 1, 2013, at a price of 100,000 euros. On that date, Linber entered into a forward contract to purchase 100,000 euros on May 1, 2013. It designated the forward contract as a cash flow hedge of the forecasted transaction. The spot rate for euros on February 1, 2013, was $1 per euro. On May 1, 2013, the forward contract was settled, and the component parts were received and paid for. The parts were consumed in the second quarter of 2013.
Linber's financial statements reported the following amounts related to this cash flow hedge (credit balances in parentheses):


Required
1. On February 1, 2013, what was the U.S. dollar per euro forward rate to May 1, 2013
2. On March 31, 2013, what was the U.S. dollar per euro forward rate to May 1, 2013
3. Was Linber better off or worse off as a result of having entered into this cash flow hedge of a forecasted transaction By what amount
4. What does the total premium expense of $6,000 reflect