On December 1, 2018, Joseph Company, a U.S. company, entered into a three-month forward contract to purchase 50,000 pesos on March 1, 2019, as a fair value hedge of a foreign currency denominated account payable. The following U.S. dollar per peso exchange rates apply:DateSpot RateForward Rate(Mar. 1, 2019)December 1, 2018$0.092 $0.105 December 31, 2018 0.090 0.095 March 1, 2019 0.089 N/A ??Joseph's incremental borrowing rate is 12 percent. The present value factor for two months at an annual interest rate of 12 percent is .9803. Which of the following is included in Joseph's December 31, 2018 balance sheet for the forward contract?
A. $490.15 liability.
B. $5,146.58 liability.
C. $500.00 liability.
D. $5,146.58 asset.
E. $490.15 asset.
Answer: A
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