On 6/1/X2, an American Firm Purchased a Inventory Costing 100,000

Multiple Choice

On 6/1/X2, an American firm purchased a inventory costing 100,000 Canadian Dollars from a Canadian firm to be paid for on 8/1/X2. Also on 6/1/X2, the American firm entered into a forward contract to purchase 100,000 Canadian dollars for delivery on 8/1/X2. The exchange rates were as follows: The American firm's fiscal year end is 6/30/X2. The changes in the value of the forward contract should be discounted at 8%. The transaction qualifies as for accounting as a cash flow hedge. What is the total amount that will be recognized in other comprehensive income in the year ended 6/30/X2?

A) $1,987 debit
B) $2,320 credit
C) $320 credit
D) $2,000 debit