Argo Enterprises is a U.S exporter that does a considerable…
Argo Enterprises is a U.S exporter that does a considerable amount of business with companies based in Mexico. As a result, the company often engages in sales and receivables that are denominated in the Mexican peso. On May 1 of the current year, the company made a sale to a Mexican company with the sales price denominated in the Mexican peso. On May 1 (the same date), Argo signed a forward contract to sell Mexican pesos and designed the transaction as a cash flow hedge of a recognized peso receivable. The spot rate on May 1 was $0.05 and the forward rate (to the settlement date) was $0.055. As a result of this transaction, Argo would report which of the following items in its current year income statement?