Lawrence Company ordered parts costing FC100,000 from a foreign supplier on May 12 when the spot rate was $0.20 per FC. A one-month forward contract was signed on that date to purchase FC100,000 at a forward rate of $0.21. The forward contract is properly designated as a fair value hedge of the FC100,000 firm commitment. On June 12, when the company receives the parts, the spot rate is $0.23.
At what amount should Lawrence Company carry the parts inventory on its books?
a. $20,000.
b. $21,000.
c. $22,000.
d. $23,000.
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