Question

On September 1, Y1, Keefer Company received an order to sell a machine to a customer in Canada at a price of 100,000 Canadian dollars (CAD). The machine was shipped and payment was received on March 1, Y2. On September 1, Y1, Keefer Company purchased a put option giving it the right to sell 100,000 CAD on March 1, Y2 at a price of $70,000. Keefer Company properly designates the option as a fair value hedge of the Canadian-dollar firm commitment. The option cost $1,500 and had a fair value of $2,400 on December 31, Y1. The fair value of the firm commitment is measured through reference to changes in the spot rate. The following spot rates apply: Date USD per CAD September 1, Y1 $0.70 December 31, Y1 $0.68 March 1, Y2 $0.67 Keefer Company's incremental borrowing rate is 12%. What time of hedge is this, considering the date on which Budvar entered into the hedge? Answer choices include "hedge of a recognized foreign- currency denominated-asset/liability", "hedge of an unrecognized foreign currency firm commitment", or "hedge of a forecasted foreign-currency-denomi nated transaction". Please copy and paste the correct answer into the blank (no apostrophes). For the following questions, round your answer to the nearest whole dollar. Use a negative sign to indicate negative numbers when needed. Do not include dollar signs in your answer. What is the impact on net income for Y1?$ What is the impact on net income for Y2? $ What is the impact on SHE for Y1?$ What is the cumulative impact on SHE for Y1 and Y2? $