ABC Inc. sells thermal compressors throughout the world. On January 1, 2019, the company sold 500 compressors to an American supplier at a total cost US$60,000 when the spot rate was US$1 = CDN$1.3750. Payment on the invoice was due by May 1, 2019. ABC entered into a 4-month hedge with its bank at a forward rate of CDN$1.40 on January 2, 2019. The forward contract was declared to be a fair value hedge of the fair value of the receivable from the American customer. ABC's year-end is on January 31, and on that date in 2019, the spot rate in effect was CDN$1.3825 and the forward rate to May 1, 2019 was CDN$1.3950.
ABC received payment from its supplier on May 1, 2019 when the spot rate was US$1 = CDN$1.3975.
A summary of the significant dates and exchange rates pertaining to this transaction are as follows:

\begin{array}{|l|r|r|}\hline & \text { Spot Rates } & \text { Forward Rates } \\\hline \text { january 1, } 2019 & \mathrm{US} \$ 1=\mathrm{CDN} \$ 1.3750 & \ldots-\cdots \\\hline\begin{array}{l}\text { January 2, } 2019 \text { (Forward contract } \\\text { date) }\end{array} & \text { US } \$ 1=\text { CDN } \$ 1.3750 & \text { US } \$ 1=\text { CDN } \$ 1.40 \\\hline \text { january 31,2019 (Year-end) } & \text { CDN } \$ 1.3825 & \text { CDN } \$ 1.3950 \\\hline \text { May 1, 2019 (Settlement date) } & \text { US\$1 =CDN\$1.3975 } & \text { US\$1 = CDN\$1.3975 }\\\hline\end{array}

*for contracts expiring on May 1, 2019
Assuming that the forward element and spot elements on the forward contract are accounted for separately, which journal entry is required to amortize the discount or premium?
A.

\begin{array} { | l | r | r | } \hline \text { OCI-Excharige gairs/losses (forward) } & \$ 375 & \\\hline \text { Forward Contract } & & \$ 375 \\\hline\end{array}

\begin{array} { | l | r | r | } \hline \text { OCI-Excharne gains/losses (forward) } & \mathbf { \$ 3 7 5 } & \\\hline \text { Hedge Revenue } & & \mathbf { \$ 3 75 } \\\hline\end{array}

\begin{array} { | l | r | r | } \hline \text { Hedge expense } & \mathbf { \$3 7 5} \\\hline \text { OCI-Excharige gains/losses (forward) } & & \mathbf { \$ 37 5 } \\\hline\end{array}

D. No journal entry required

The Rate Charged by Commercial Banks for the Purchase of Any

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