Exam 10: Foreign Currency Transactions

In which of the following situations is a gain or loss recorded on a commitment assets or liability which would not otherwise be recorded?

The rate charged by commercial banks for the purchase of any foreign currency (in Canadian dollars) on any given day would be based on which of the following?

The average rates in effect for 2010 and 2011 were as follows: What is the amount of interest paid (in Canadian Dollars) during 2011?

Prepare any and all journal entries arising from this transaction.

The average rates in effect for 2010 and 2011 were as follows: What is the amount of the foreign exchange gain or loss recognized on the 2010 Income Statement as a result of revaluing the loan payable?

RXN's year-end is on December 31. On November 1, 2014 when the U.S. dollar was worth $1.165 CDN, RXN sold merchandise to an American client for $300,000. Full payment of this invoice was expected by March 1, 2015. On December 1, the spot rate was $1.1450 CDN and the three-month forward rate was $1.1250 CDN. In order to minimize its Foreign Exchange risk and exposure, RXN entered into a contract with its bank on December 1, 2014 to deliver $300,000 U.S. in three months' time. The spot rate at year-end was $1.16 CDN and the forward rate from December 31, 2014 to March 1, 2015 was $1.14 CDN. On March 1, 2015, RXN received the $300,000 U.S. from its client and settled its contract with the bank. The forward contract was to be accounted for as a fair value hedge of the US dollar receivable. Significant dates and exchange rates pertaining to this transaction are as follows: What is the amount of the discount on the forward contract?

RXN's year-end is on December 31. On November 1, 2014 when the U.S. dollar was worth $1.165 CDN, RXN sold merchandise to an American client for $300,000. Full payment of this invoice was expected by March 1, 2015. On December 1, the spot rate was $1.1450 CDN and the three-month forward rate was $1.1250 CDN. In order to minimize its Foreign Exchange risk and exposure, RXN entered into a contract with its bank on December 1, 2014 to deliver $300,000 U.S. in three months' time. The spot rate at year-end was $1.16 CDN and the forward rate from December 31, 2014 to March 1, 2015 was $1.14 CDN. On March 1, 2015, RXN received the $300,000 U.S. from its client and settled its contract with the bank. The forward contract was to be accounted for as a fair value hedge of the US dollar receivable. Significant dates and exchange rates pertaining to this transaction are as follows: How much (in Canadian Dollars) will RXN expect to receive from the bank when its forward contract is settled?

At what amount (in Canadian Dollars) would RXN's sale be recorded initially?

What is the amount of CMI's foreign exchange gain or loss at year-end?

On July 1, 2012, CDN purchased inventory from its main U.S. supplier, RNB Enterprises, at a cost of US$1,000. CDN's year end is on July 31. Some important dates regarding this transaction, as well as the exchange rates in effect at each of these dates are shown below: At what amount would CDN record its inventory purchase from RNB at the time of purchase?

GWN has a July 31st year end. On that date the forward rate for US dollars for three months was CDN $1.2225. Prepare any and all Journal Entries you deem necessary to record the above transaction.

Prepare a partial Balance Sheet for Canada Corp on December 31, 2013 showing the account receivable from the Japanese client as well as the accounts associated with the hedge.