On October 1, 2018, Eagle Company forecasts the purchase of inventory from a British supplier on February 1, 2019, at a price of 100,000 British pounds. On October 1, 2018, Eagle pays $1,800 for a three-month call option on 100,000 pounds with a strike price of $2.00 per pound. The option is considered to be a cash flow hedge of a forecasted foreign currency transaction. On December 31, 2018, the option has a fair value of $1,600. The following spot exchange rates apply:DateSpot RateOctober 1, 2018$2.00 December 31, 2018 1.97 February 1, 2019 2.01 ?What is the amount of Adjustment to Accumulated Other Comprehensive Income for 2019 from these transactions?
A. $2,000.
B. $1,000.
C. $2,600.
D. $1,600.
E. $1,800.
Answer: B
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