Can someone help me with this? The answer is probably obvious but I am lost
On October 1, 2008, Buyco entered into a legally enforceable contract to acquire raw material inventory in 180 days for $20,000. In order to mitigate the risk of a change in the value of the raw materials, Buyco also entered into a qualified 180-day forward contract to hedge the fair value of the raw materials. At December 31, 2008, the value of the raw materials had decreased by $500, and the fair value of the futures contract had increased by $480. On March 29, 2009, the date the raw materials were delivered to Buyco, they had a fair value of $19,300, and the forward contract had a fair value of $700. Which one of the following is the net gain or loss that would be recognized on the raw material and related forward contract by Buyco over the life of the contract?
the answer is 0, because the decrease in raw materials (20,000-19300) 700 was offset by the hedge of 700, as stated in the problem. Why isn't the decrease of $500 of raw materials and increase of $480 of the contract in 2008 considered in the problem?
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