Question 1

What is the amount of Cost of Goods Sold for 2019 as a result of these transactions?

Accepted Answer

A)  $200,000. 
B)  $195,000. 
C)  $201,000. 
D)  $202,600. 
E)  $203,000. 
A)  $200,000. 
B)  $195,000. 
C)  $201,000. 
D)  $202,600. 
E)  $203,000.

Question 2

The City of Kamen maintains a collection of paintings of a former citizen in its City Hall building.  During the year, one painting was purchased by the city for $2,000 at an auction using appropriated funds in the General Fund.  Also during the year, a donation of a painting valued at $3,000 was made to the city.
-Frankfurter Company, a U.S.company, had a ruble receivable from exports to Russia and a euro payable resulting from imports from Italy.Frankfurter recorded foreign exchange loss related to both its ruble receivable and euro payable.Did the foreign currencies increase or decrease in dollar value from the date of the transaction to the settlement date?

Accepted Answer

The answer of The City of Kamen maintains a collection...

Question 3

Where can you find exchange rates between the U.S.dollar and most foreign currencies?

Accepted Answer

Foreign exchange rates are pub

Question 4

Compute the fair value of the foreign currency option at December 31, 2018.

Accepted Answer

A)  $6,000. 
B)  $4,500. 
C)  $3,000. 
D)  $7,500. 
E)  $1,500. 
A)  $6,000. 
B)  $4,500. 
C)  $3,000. 
D)  $7,500. 
E)  $1,500.

Question 5

Authoritative literature provides guidance for hedges of the following sources of foreign exchange risk. I.Recognized foreign currency denominated assets and liabilities.
II.Unrecognized foreign currency firm commitments.
III.Forecasted foreign currency denominated transactions.

Accepted Answer

A)  I only 
B)  I and II 
C)  II only 
D)  II and III 
E)  I, II, and III 
A)  I only 
B)  I and II 
C)  II only 
D)  II and III 
E)  I, II, and III

Question 6

What amount of foreign exchange gain or loss should be recorded on December 31?

Accepted Answer

A)  $300 gain. 
B)  $300 loss. 
C)  $ 0. 
D)  $941 loss. 
E)  $941 gain. 
A)  $300 gain. 
B)  $300 loss. 
C)  $ 0. 
D)  $941 loss. 
E)  $941 gain.

Question 7

On October 31, 2017, Darling Company negotiated a two-year 100,000 franc loan from a foreign bank at an interest rate of 3 percent per year.Interest payments are made annually on October 31, and the principal will be repaid on October 31, 2019.Darling prepares U.S.-dollar financial statements and has a December 31 year-end.Prepare all journal entries related to this foreign currency borrowing assuming the following:

Accepted Answer

The answer of On October 31, 2017, Darling Company negotiated...

Question 8

Compute the fair value of the foreign currency option at December 1, 2018.

Accepted Answer

A)  $6,000. 
B)  $4,500. 
C)  $3,000. 
D)  $7,500. 
E)  $1,500. 
A)  $6,000. 
B)  $4,500. 
C)  $3,000. 
D)  $7,500. 
E)  $1,500.

Question 9

What is the amount of Adjustment to Accumulated Other Comprehensive Income for 2019 from these transactions?

Accepted Answer

A)  $1,000. 
B)  $1,600. 
C)  $1,800. 
D)  $2,000. 
E)  $2,600. 
A)  $1,000. 
B)  $1,600. 
C)  $1,800. 
D)  $2,000. 
E)  $2,600.

Question 10

For each of the following situations, select the best answer concerning accounting for foreign currency transactions:
(G) Results in a foreign exchange gain.
(L) Results in a foreign exchange loss.
(N) No foreign exchange gain or loss.
 .Export sale by a U.S.company denominated in dollars, foreign currency of buyer appreciates.
_____2.Export sale by a U.S.company denominated in foreign currency, foreign currency of buyer appreciates.
_____3.Import purchase by a U.S.company denominated in foreign currency, foreign currency of buyer appreciates.
_____4.Import purchase by a U.S.company denominated in dollars, foreign currency of buyer appreciates.
_____5.Import purchase by a U.S.company denominated in foreign currency, foreign currency of buyer depreciates.
_____6.Import purchase by a U.S.company denominated in dollars, foreign currency of buyer depreciates.
_____7.Export sale by a U.S.company denominated in dollars, foreign currency of buyer depreciates.
_____8.Export sale by a U.S.company denominated in foreign currency, foreign currency of buyer depreciates.

Accepted Answer

(1) N; (2) G; (3) L

Question 11

What amount will Woolsey include as Adjustment to Net Income for the period ended October 31?

Accepted Answer

A)  $ 6,000 positive. 
B)  $ 6,000 negative. 
C)  $10,000 positive. 
D)  $10,000 negative. 
E)  $14,000 positive. 
A)  $ 6,000 positive. 
B)  $ 6,000 negative. 
C)  $10,000 positive. 
D)  $10,000 negative. 
E)  $14,000 positive.

Question 12

Compute the U.S.dollars received on February 1, 2019.

Accepted Answer

A)  $138,000. 
B)  $136,500. 
C)  $145,500. 
D)  $141,000 
E)  $142,500. 
A)  $138,000. 
B)  $136,500. 
C)  $145,500. 
D)  $141,000 
E)  $142,500.

Question 13

Assuming a forward contract was entered into on December 16, at what amount should the forward contract be recorded at December 31, 2018? Assume an annual interest rate of 12% and a fair value hedge.The present value for one month at 12% is .9901.

Accepted Answer

A)  $ 200. 
B)  $ 295. 
C)  $ 495. 
D)  $ 500. 
E)  $ 9,300. 
A)  $ 200. 
B)  $ 295. 
C)  $ 495. 
D)  $ 500. 
E)  $ 9,300.

Question 14

Assuming a forward contract was entered into on December 16, what would be the net impact on Car Corp.'s 2019 income statement related to this transaction?

Accepted Answer

A)  $ 500 (gain). 
B)  $ 500 (loss). 
C)  $ 300 (gain). 
D)  $ 300 (loss). 
E)  $0. 
A)  $ 500 (gain). 
B)  $ 500 (loss). 
C)  $ 300 (gain). 
D)  $ 300 (loss). 
E)  $0.

Question 15

All of the following data may be needed to determine the fair value of a forward contract at any point in time except

Accepted Answer

A)  The forward rate when the forward contract was entered into. 
B)  The current forward rate for a contract that matures on the same date as the forward contract entered into. 
C)  The future spot rate. 
D)  A discount rate. 
E)  The company's incremental borrowing rate. 
A)  The forward rate when the forward contract was entered into. 
B)  The current forward rate for a contract that matures on the same date as the forward contract entered into. 
C)  The future spot rate. 
D)  A discount rate. 
E)  The company's incremental borrowing rate.

Question 16

How much foreign exchange gain or loss should be included in Shannon's 2018 income statement?

Accepted Answer

A)  $1,000 gain. 
B)  $1,000 loss. 
C)  $2,000 gain. 
D)  $2,000 loss. 
E)  $8,000 loss. 
A)  $1,000 gain. 
B)  $1,000 loss. 
C)  $2,000 gain. 
D)  $2,000 loss. 
E)  $8,000 loss.

Question 17

What amount should be included as a foreign exchange gain or loss from the two transactions for 2019?

Accepted Answer

A)  $1,000 loss. 
B)  $1,000 gain. 
C)  $2,000 loss. 
D)  $4,000 gain. 
E)  $4,000 loss. 
A)  $1,000 loss. 
B)  $1,000 gain. 
C)  $2,000 loss. 
D)  $4,000 gain. 
E)  $4,000 loss.

Question 18

Assuming a forward contract was entered into on December 16, how would the forward contract be reflected on Car's December 31, 2018 balance sheet?

Accepted Answer

A)  Forward contract (asset). 
B)  Forward contract (liability). 
C)  Foreign currency (asset). 
D)  Foreign currency (liability). 
E)  Foreign exchange (liability) 
A)  Forward contract (asset). 
B)  Forward contract (liability). 
C)  Foreign currency (asset). 
D)  Foreign currency (liability). 
E)  Foreign exchange (liability)

Question 19

Assuming this is a cash flow hedge; prepare journal entries for this sales transaction and forward contract.

Accepted Answer

@#IMG-DLM& ¹ [(.80 - .78) 100,0

Question 20

What happens when a U.S.company sells goods denominated in a foreign currency and the foreign currency appreciates?

Accepted Answer

The event

Exam 9: Foreign Currency Transactions and Hedging Foreign Exchange Risk

What is the amount of Cost of Goods Sold for 2019 as a result of these transactions?

Where can you find exchange rates between the U.S.dollar and most foreign currencies?

Compute the fair value of the foreign currency option at December 31, 2018.

Authoritative literature provides guidance for hedges of the following sources of foreign exchange risk. I.Recognized foreign currency denominated assets and liabilities. II.Unrecognized foreign currency firm commitments. III.Forecasted foreign currency denominated transactions.

What amount of foreign exchange gain or loss should be recorded on December 31?

Compute the fair value of the foreign currency option at December 1, 2018.

What is the amount of Adjustment to Accumulated Other Comprehensive Income for 2019 from these transactions?

What amount will Woolsey include as Adjustment to Net Income for the period ended October 31?

Compute the U.S.dollars received on February 1, 2019.

Assuming a forward contract was entered into on December 16, at what amount should the forward contract be recorded at December 31, 2018? Assume an annual interest rate of 12% and a fair value hedge.The present value for one month at 12% is .9901.

Assuming a forward contract was entered into on December 16, what would be the net impact on Car Corp.'s 2019 income statement related to this transaction?

All of the following data may be needed to determine the fair value of a forward contract at any point in time except

How much foreign exchange gain or loss should be included in Shannon's 2018 income statement?

What amount should be included as a foreign exchange gain or loss from the two transactions for 2019?

Assuming a forward contract was entered into on December 16, how would the forward contract be reflected on Car's December 31, 2018 balance sheet?

Assuming this is a cash flow hedge; prepare journal entries for this sales transaction and forward contract.

What happens when a U.S.company sells goods denominated in a foreign currency and the foreign currency appreciates?

The Equity Method of Accounting for Investments

A: the Equity Method of Accounting for Investments

Consolidation of Financial Information

A: Consolidation of Financial Information

Consolidations - Subsequent to the Date of Acquisition

A: Consolidations - Subsequent to the Date of Acquisition

Consolidated Financial Statements and Outside Ownership

A: Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements Intra-Entity Asset Transactions

A: Consolidated Financial Statements Intra-Entity Asset Transactions

Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

A: Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

Consolidated Financial Statements - Ownership Patterns and Income Taxes

A: Consolidated Financial Statements - Ownership Patterns and Income Taxes

Segment and Interim Reporting

A: Segment and Interim Reporting

A: Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

A: Translation of Foreign Currency Financial Statements

Worldwide Accounting Diversity and International Accounting Standards

A: Worldwide Accounting Diversity and International Accounting Standards

Financial Reporting and the Securities and Exchange Commission

A: Financial Reporting and the Securities and Exchange Commission

Accounting for Legal Reorganizations and Liquidations

A: Accounting for Legal Reorganizations and Liquidations

Partnerships: Formation and Operation

A: Partnerships: Formation and Operation

Partnerships: Termination and Liquidation

A: Partnerships: Termination and Liquidation

Accounting for State and Local Governments, Part I

A: Accounting for State and Local Governments, Part I

Accounting for State and Local Governments, Part II

A: Accounting for State and Local Governments, Part II

Accounting for Not-For-Profit Entities

A: Accounting for Not-For-Profit Entities

Accounting for Estates and Trusts

A: Accounting for Estates and Trusts

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