Problem
Levin company entered into a forward contract to speculate in the foreign currency. It sold 100,000 foreign currency units under a contract dated November 1, 20X8, for delivery on January 31, 20X9:
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11/1/20X8
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12/31/20X8
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Spot rates
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$0.035
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$0.037
|
|
30-da forward rate
|
0.034
|
0.036
|
|
90-day forward rate
|
0.033
|
0.035
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In its income statement for the year ended December 31, 20X8, what amount of loss should Levin report from this forward contract?