On July 1, 2020, CANCO purchased inventory from its main U.S. supplier, RNB Enterprises, at a cost of US$12,000. CANCO's year end is on July 31. Payment of US$12,000 for the inventory is due on August 31, 2020. Some important dates regarding this transaction, as well as the exchange rates in effect at each of these dates are shown below: \[\begin{array} { | l | l | } \hline \text { Tarsaction date: July } 1,2020 : & \text { 1 U.S. Dollar } = \text { CDN } \$ 1.370 \\ \hline\text { Year end July } 31,2020 : & \text { 1 U.S. Dollar } = \text { CDN } \$ 1.345 \\ \hline \text { Setternent date: August } 31,2020 : & \text { 1 U.S. Dollar } = \text { CDN } \$ 1.325 \\ \hline \end{array}\] What was the amount in Canadian dollars paid by CANCO to RNB on the settlement date?

A) CDN$15,900 B) CDN$16,440 C) CDN$16,140 D) CDN$12,000 A) CDN$15,900 B) CDN$16,440 C) CDN$16,140 D) CDN$12,000

On January 1, 2020, Canadian Music International (CMI), a manufacturer of high-end recording equipment based in Toronto, shipped US$120,000 worth of inventory to its main U.S. distributor in Chicago, with full payment of these goods due by February 28, 2020. CMI has a January 31 year end. A list of significant dates and exchange rates is shown below. $\begin{array}{|l|l|} \hline \text { Transaction Date: January 1, 2020 } & \text { US \$1= CDN \$1.141 } \\ \hline \text { Year-End Date: January 31, 2020 } & \text { US \$1=CDN } \$ 1.142 \\ \hline \text { SettlementDate: February 28,2020 } & \text { US } \$ 1=\text { CDN } \$ 1.145\\\hline \end{array}$ The invoice price billed by CMI was US$120,000. What is the amount of CMI's foreign exchange gain or loss on February 28th?

A) CDN$360 loss. B) CDN$120 gain. C) CDN$360 gain. D) CDN$480 gain. A) CDN$360 loss. B) CDN$120 gain. C) CDN$360 gain. D) CDN$480 gain.

On January 1, 2020, Canadian Music International (CMI), a manufacturer of high-end recording equipment based in Toronto, shipped US$120,000 worth of inventory to its main U.S. distributor in Chicago, with full payment of these goods due by February 28, 2020. CMI has a January 31 year end. A list of significant dates and exchange rates is shown below. \[\begin{array} { | l | l | } \hline \text { Transaction Date: Jaruaary } 1,2020 & \text { US } \$ 1 = \text { CDN } \$ 1.141 \\ \hline \text { Year-End Date: Jaruary } 31,2020 & \text { US } \$ 1 = \text { CDN } \$ 1.142 \\ \hline \text { Setternent Date: February 28, 2020 } & \text { US } \$ 1 = \text { CDN } \$ 1.145 \\ \hline \end{array}\] The invoice price billed by CMI was US$120,000. At what value would CMI record the initial sale to its American distributor?

A) CDN$137,400 B) US$120,000 C) CDN$120,000 D) CDN$136,920 A) CDN$137,400 B) US$120,000 C) CDN$120,000 D) CDN$136,920

XYZ Corp. has a calendar year end. On January 1, 2019, the company borrowed $5,000,000 U.S. dollars from an American Bank. The loan is to be repaid on December 31, 2022 and requires interest at 5% to be paid every December 31. The loan and applicable interest are both to be repaid in U.S. dollars. XYZ does not hedge to minimize its foreign exchange risk. The following exchange rates were in effect throughout the term of the loan: \[\begin{array} { | l | l | } \hline \text { Jaruary } 1,2019 & \text { US } \$ 1 = \text { CDN } \$ 1.1500 \\ \hline \text { December } 31,2019 & \text { US } \$ 1 = \text { CDN } \$ 1.1490 \\ \hline \text { December } 31,2020 & \text { US } \$ 1 = \text { CDN } \$ 1.1485 \\ \hline \text { December } 31,2021 & \text { US } \$ 1 = \text { CDN } \$ 1.1483 \\ \hline \text { December } 31,2022 & \text { US } \$ 1 = \text { CDN } \$ 1.1487 \\ \hline \end{array}\] The average rates in effect for 2019 and 2020 were as follows: \[\begin{array} { | l | r | } \hline 2019 : & \text { US } \$ 1 = \text { CDN } \$ 1.1493 \\ \hline 2020 : & \text { US } \$ 1 = \text { CDN } \$ 1.1487 \\ \hline \end{array}\] What is the amount of interest expense (in Canadian Dollars) recorded for 2019?

A) $250,000 B) $287,250 C) $287,325 D) $372,500 A) $250,000 B) $287,250 C) $287,325 D) $372,500

On July 1, 2020, CANCO purchased inventory from its main U.S. supplier, RNB Enterprises, at a cost of US$12,000. CANCO's year end is on July 31. Payment of US$12,000 for the inventory is due on August 31, 2020. Some important dates regarding this transaction, as well as the exchange rates in effect at each of these dates are shown below: \[\begin{array} { | l | l | l } \hline \text { Trarsaction date: July } 1,2020 : & \text { 1 U.S. Dollar } = \text { CDN } 1.370 \\ \hline\text { Year end July } 31,2020 : & \text { 1 U.S. Dollar } = \text { CDN } \$ 1.345 \\ \hline \text { Setternent date: August } 31,2020 : & \text { 1 U.S. Dollar } = \text { CDN } \$ 1.325 \\ \hline \end{array}\] What would be the amount of the foreign exchange gain or loss recorded for the year end, July 31, 2020?

A) A CDN$300 exchange loss. B) A CDN$540 exchange gain. C) A CDN$300 exchange gain. D) Nil. Any exchange gain or loss is deferred until settlement. A) A CDN$300 exchange loss. B) A CDN$540 exchange gain. C) A CDN$300 exchange gain. D) Nil. Any exchange gain or loss is deferred until settlement.

XYZ Corp. has a calendar year end. On January 1, 2019, the company borrowed $5,000,000 U.S. dollars from an American Bank. The loan is to be repaid on December 31, 2022 and requires interest at 5% to be paid every December 31. The loan and applicable interest are both to be repaid in U.S. dollars. XYZ does not hedge to minimize its foreign exchange risk. The following exchange rates were in effect throughout the term of the loan: \[\begin{array} { | l | c | } \hline \text { Jaruary } 1,2019 & \text { US } \$ 1 = \text { CDN } \$ 1.1500 \\ \hline \text { Decerrber } 31,2019 & \text { US } \$ 1 = \text { CDN } \$ 1.1490 \\ \hline \text { December } 31,2020 & \text { US } \$ 1 = \text { CDN } \$ 1.1485 \\ \hline \text { December } 31,2021 & \text { US } \$ 1 = \text { CDN } \$ 1.1483 \\ \hline \text { December } 31,2022 & \text { US } \$ 1 = \text { CDN } \$ 1.1487 \\ \hline \end{array}\] The average rates in effect for 2019 and 2020 were as follows: \[\begin{array} { | l | l | } \hline 2019 : & \text { US } \$ 1 = \text { CDN } \$ 1.1493 \\ \hline 2020 : & \text { US } \$ 1 = \text { CDN } \$ 1.1487 \\ \hline \end{array}\] By what amount (in Canadian Dollars) would XYZ have to adjust its Loan Liability on December 31, 2019 as a result of the year's foreign exchange rate fluctuations?

A) A $5,000 decrease. B) A $2,500 decrease C) A $5,000 increase. D) Nil. A) A $5,000 decrease. B) A $2,500 decrease C) A $5,000 increase. D) Nil.

On July 1, 2020, CANCO purchased inventory from its main U.S. supplier, RNB Enterprises, at a cost of US$12,000. CANCO's year end is on July 31. Payment of US$12,000 for the inventory is due on August 31, 2020. Some important dates regarding this transaction, as well as the exchange rates in effect at each of these dates are shown below: \[\begin{array} { | l | l | l } \hline \text { Parsaction date: July } 1,2020 : & \text { 1 U.S. Dollar } = \text { CDN } \$ 1.370 \\ \hline\text { Year end July } 31,2020 : & \text { 1 U.S. Dollar } = \text { CDN } \$ 1.345 \\ \hline \text { Setternent date: August } 31,2020 : & \text { 1 U.S. Dollar } = \text { CDN } \$ 1.325 \\ \hline \end{array}\] At what amount would CANCO record its liability to RNB at the time of the inventory purchase?

A) CDN$15,900 B) CDN$16,440 C) CDN$16,140 D) US$12,000 A) CDN$15,900 B) CDN$16,440 C) CDN$16,140 D) US$12,000

Exam 10: Foreign Currency Transactions

RXN's year-end is on December 31. On November 1, 2019 when the U.S. dollar was worth CDN$1.365, RXN sold merchandise to an American client for US$300,000. Full payment of this invoice was expected by March 1, 2020. On December 1, the spot rate was CDN$1.3450, and the three-month forward rate was CDN$1.3250. In order to minimize its Foreign Exchange risk and exposure, RXN entered into a forward contract with its bank on December 1, 2019 to deliver US$300,000 in three months' time. The spot rate at year-end was CDN$1.36 and the forward rate from December 31, 2019 to March 1, 2020 was CDN$1.34. On March 1, 2020, RXN received the US$300,000 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: Spot\nobreakspaceRates Forward\nobreakspaceRates November 1, 2019 (Transaction date) \ 1=\ 1.365 December 1,2019 (Hedged date) US \ 1= CDN \ 1.3450 US \1 =CDN \1 .3250 December 31,2019 (Year-end) CDN \ 1.36 CDN \ 1.34 March 1, 2020 (Settlement date) \ 1= CDN \ 1.368 US \1 =CDN \1 .368. *for contracts expiring on March 1, 2020 At what amount (in Canadian Dollars) would RXN's sale be recorded initially?

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C

Compucat is a Canadian manufacturing company that produces inexpensive personal and laptop computers. The company has been generating progressively more of its sales from foreign markets. During 2019, the company started purchasing most of its components from a supplier in Germany. To deal with the uncertainty associated with foreign exchange fluctuations, all of Compucat's foreign currency denominated receivables and payables are hedged with contracts with the company's bank. Compucat's year-end is on December 31. The following transactions took place in 2019: On September 1, 2019, Compucat purchased components from its German supplier for 100,000 Euros. On that date AMC entered into a forward contract for 100,000 Euros at the 60 day forward rate of 1 Euro = CDN$1.50. The forward contract was designated as a fair value hedge of the amount payable to the German supplier. Compucat settled with the bank and paid its supplier in full on December 1, 2019. On December 1, 2019 Compucat also shipped a batch of laptop computers to an American client for US$250,000. The invoice required that Compucat receive its payment in full by January 31, 2019. On the date of the sale, the company entered into a forward contract for US$250,000 at the two-month forward rate of US$1 = CDN$1.25. This forward contract was designated to be a fair value hedge of the amount due from the American customer. The dates and exchange rates relevant to these transactions are shown below. Spot rate Forward rate September 1, 2019: 1 Euro = CDN \ 1.4875 1 Euro = CDN \ 1.5000 December 1,2019: 1 Euro = CDN \ 1.4800 1 Euro = CDN \ 1.4800 \ 1=\ 1.2600 \ 1=\ 1.2500 December 31,2019: \ 1=\ 1.2700 \ 1=\ 1.2600 Prepare the December 31, 2019 Balance Sheet Presentation of the Receivable from the American client and the accounts associated with the hedge. Assume Compucat used the gross method to record the forward contract.

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Compucat Inc.
Balance Sheet as at December 31, 2019
$\begin{array}{|l|r|}\hline \text { Assets } & \\\hline \text { Accounts Receivable [US } \$ 250,000 \times 1.27 \text { spotrate] } & \$ 317,500 \\\hline \text { Liabilities } & \\\hline \text { Forward contract } & \$ 2,500 \\\hline \text { Receivable from Bank (US\$250,000@\$1.25) } & \$ 312,500 \\\hline \text { Less: Payable to Bank (US\$250,000@\$1.26) } & \$ 315,000 \\\hline & \$ 2,500\\\hline\end{array}$

Maplehauff Inc. sells lumber to a number of clients around the world. On December 1, 2019 the company shipped some lumber to a client in the U.S. The selling price was established at US$600,000 with payment to be received on March 1, 2020. On December 3, 2019 the company entered into a hedge with a Canadian Bank at the 90 day forward rate of US$1 = CDN$1.275. The forward contract was designated as a cash flow hedge of the amount due from the American customer. Maplehauff uses the net method to record the forward contract.

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Maplehauff Inc.
Balance Sheet as at December 31, 2019
$\begin{array}{|l|r|}\hline \text { Assets } & \\\hline \text { Accounts Receivable [US } \$ 600,000 \times 1.2455] & \$ 747,300 \\\hline \text { Forward contract } & \$ 12,000 \\\hline\end{array}$

RXN's year-end is on December 31. On November 1, 2019 when the U.S. dollar was worth CDN$1.365, RXN sold merchandise to an American client for US$300,000. Full payment of this invoice was expected by March 1, 2020. On December 1, the spot rate was CDN$1.3450, and the three-month forward rate was CDN$1.3250. In order to minimize its Foreign Exchange risk and exposure, RXN entered into a forward contract with its bank on December 1, 2019 to deliver US$300,000 in three months' time. The spot rate at year-end was CDN$1.36 and the forward rate from December 31, 2019 to March 1, 2020 was CDN$1.34. On March 1, 2020, RXN received the US$300,000 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: Spot\nobreakspaceRates Forward\nobreakspaceRates November 1, 2019 (Transaction date) \ 1=\ 1.365 December 1,2019 (Hedged date) US \ 1= CDN \ 1.3450 US \1 =CDN \1 .3250 December 31,2019 (Year-end) CDN \ 1.36 CDN \ 1.34 March 1, 2020 (Settlement date) \ 1= CDN \ 1.368 US \1 =CDN \1 .368. *for contracts expiring on March 1, 2020 What is the amount of the discount on the forward contract?

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Question 4

On July 1, 2020, CANCO purchased inventory from its main U.S. supplier, RNB Enterprises, at a cost of US$12,000. CANCO's year end is on July 31. Payment of US$12,000 for the inventory is due on August 31, 2020. Some important dates regarding this transaction, as well as the exchange rates in effect at each of these dates are shown below: Tarsaction date: July 1,2020: 1 U.S. Dollar = CDN \ 1.370 Year end July 31,2020: 1 U.S. Dollar = CDN \ 1.345 Setternent date: August 31,2020: 1 U.S. Dollar = CDN \ 1.325 What was the amount in Canadian dollars paid by CANCO to RNB on the settlement date?

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Question 5

On January 1, 2020, Canadian Music International (CMI), a manufacturer of high-end recording equipment based in Toronto, shipped US$120,000 worth of inventory to its main U.S. distributor in Chicago, with full payment of these goods due by February 28, 2020. CMI has a January 31 year end. A list of significant dates and exchange rates is shown below. Transaction Date: January 1, 2020 US \1 = CDN \1 .141 Year-End Date: January 31, 2020 US \1 =CDN \ 1.142 SettlementDate: February 28,2020 US \ 1= CDN \ 1.145 The invoice price billed by CMI was US$120,000. What is the amount of CMI's foreign exchange gain or loss on February 28th?

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Question 6

On July 1, 2019, North Inc., based in Alberta, ordered merchandise from an American supplier for US$600,000. Delivery was scheduled for the month of October, with payment to be made in full on November 15, 2019. Once the order was placed, North entered into a forward contract with its bank to purchase US$600,000 on the settlement date at the forward rate of CDN$1.3625. The forward contract was designated as a cash flow hedge of the cash flow required to settle with the American supplier. The merchandise was received on October 1, 2019, when the spot rate was US$1 = CDN$1.3575. On October 31, the company's year-end, the spot rate was $1.3690. North purchased the U.S. dollars to pay its supplier on November 15, 2019 when the spot rate was CDN$1.3725. The forward rate to November 15, 2019, was CDN$1.365 on October 1 and CDN$1.37 on October 31. A summary of the significant dates and exchange rates pertaining to this transaction are as follows: Spot Rates Forward Rates July 1,2019 (Order date and hedge date) \ 1=\ 1.3445 \ 1=\ 1.3625 October 1,2019 (Delivery date) \ 1=\ 1.3575 \ 1=\ 1.365 October 31,2019(Year-end) CDN \1 .369 CDN \1 .37 November 15,2019 (Settlement date) US \1 =CDN \1 .3725 US \1 =CDN \1 .3725 *for contracts expiring on November 15, 2019 What amount (in Canadian dollars) did North pay to its American supplier for the purchase of the inventory?

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Question 7

On January 1, 2020, Canadian Music International (CMI), a manufacturer of high-end recording equipment based in Toronto, shipped US$120,000 worth of inventory to its main U.S. distributor in Chicago, with full payment of these goods due by February 28, 2020. CMI has a January 31 year end. A list of significant dates and exchange rates is shown below. Transaction Date: Jaruaary 1,2020 US \ 1= CDN \ 1.141 Year-End Date: Jaruary 31,2020 US \ 1= CDN \ 1.142 Setternent Date: February 28, 2020 US \ 1= CDN \ 1.145 The invoice price billed by CMI was US$120,000. At what value would CMI record the initial sale to its American distributor?

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Question 8

ABC Inc. sells thermal compressors throughout the world. On January 1, 2019, the company sold 500 compressors to an American supplier at a total cost US$60,000 when the spot rate was US$1 = CDN$1.3750. Payment on the invoice was due by May 1, 2019. ABC entered into a 4-month hedge with its bank at a forward rate of CDN$1.40 on January 2, 2019. The forward contract was declared to be a fair value hedge of the fair value of the receivable from the American customer. ABC's year-end is on January 31, and on that date in 2019, the spot rate in effect was CDN$1.3825 and the forward rate to May 1, 2019 was CDN$1.3950. ABC received payment from its supplier on May 1, 2019 when the spot rate was US$1 = CDN$1.3975. A summary of the significant dates and exchange rates pertaining to this transaction are as follows: Spot Rates Forward Rates january 1, 2019 \ 1=\ 1.3750 \ldots-\@cdots January 2, 2019 (Forward contract date) US \ 1= CDN \ 1.3750 US \ 1= CDN \ 1.40 january 31,2019 (Year-end) CDN \ 1.3825 CDN \ 1.3950 May 1, 2019 (Settlement date) US \1 =CDN \1 .3975 US \1 = CDN \1 .3975 *for contracts expiring on May 1, 2019 What is the amount of the discount or premium on the forward contract?

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Question 9

ABC Inc. sells thermal compressors throughout the world. On January 1, 2019, the company sold 500 compressors to an American supplier at a total cost US$60,000 when the spot rate was US$1 = CDN$1.3750. Payment on the invoice was due by May 1, 2019. ABC entered into a 4-month hedge with its bank at a forward rate of CDN$1.40 on January 2, 2019. The forward contract was declared to be a fair value hedge of the fair value of the receivable from the American customer. ABC's year-end is on January 31, and on that date in 2019, the spot rate in effect was CDN$1.3825 and the forward rate to May 1, 2019 was CDN$1.3950. ABC received payment from its supplier on May 1, 2019 when the spot rate was US$1 = CDN$1.3975. A summary of the significant dates and exchange rates pertaining to this transaction are as follows: Spot Rates Forward Rates january 1, 2019 \ 1=\ 1.3750 \ldots-\@cdots January 2, 2019 (Forward contract date) US \ 1= CDN \ 1.3750 US \ 1= CDN \ 1.40 january 31,2019 (Year-end) CDN \ 1.3825 CDN \ 1.3950 May 1, 2019 (Settlement date) US \1 =CDN \1 .3975 US \1 = CDN \1 .3975 *for contracts expiring on May 1, 2019 What is the required adjustment to the carrying value of the forward contract at the company's year-end?

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Question 10

On July 1, 2019, North Inc., based in Alberta, ordered merchandise from an American supplier for US$600,000. Delivery was scheduled for the month of October, with payment to be made in full on November 15, 2019. Once the order was placed, North entered into a forward contract with its bank to purchase US$600,000 on the settlement date at the forward rate of CDN$1.3625. The forward contract was designated as a cash flow hedge of the cash flow required to settle with the American supplier. The merchandise was received on October 1, 2019, when the spot rate was US$1 = CDN$1.3575. On October 31, the company's year-end, the spot rate was $1.3690. North purchased the U.S. dollars to pay its supplier on November 15, 2019 when the spot rate was CDN$1.3725. The forward rate to November 15, 2019, was CDN$1.365 on October 1 and CDN$1.37 on October 31. A summary of the significant dates and exchange rates pertaining to this transaction are as follows: Spot Rates Forward Rates July 1,2019 (Order date and hedge date) \ 1=\ 1.3445 \ 1=\ 1.3625 October 1,2019 (Delivery date) \ 1=\ 1.3575 \ 1=\ 1.365 October 31,2019(Year-end) CDN \1 .369 CDN \1 .37 November 15,2019 (Settlement date) US \1 =CDN \1 .3725 US \1 =CDN \1 .3725 *for contracts expiring on November 15, 2019 What is the cost of the inventory to North if the exchange gain or loss on the forward contract is adjusted to the value of the inventory on the delivery date?

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Question 11

RXN's year-end is on December 31. On November 1, 2019 when the U.S. dollar was worth CDN$1.365, RXN sold merchandise to an American client for US$300,000. Full payment of this invoice was expected by March 1, 2020. On December 1, the spot rate was CDN$1.3450 and the three-month forward rate was CDN$1.3250. In order to minimize its Foreign Exchange risk and exposure, RXN entered into a forward contract with its bank on December 1, 2019 to deliver US$300,000 in three months' time. The spot rate at year-end was CDN$1.36 and the forward rate from December 31, 2019 to March 1, 2020 was CDN$1.34. On March 1, 2020, RXN received the US$300,000 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: Spot\nobreakspaceRates Forward\nobreakspaceRates November 1, 2019 (Transaction date) \ 1=\ 1.365 December 1,2019 (Hedged date) US \ 1= CDN \ 1.3450 US \1 =CDN \1 .3250 December 31,2019 (Year-end) CDN \ 1.36 CDN \ 1.34 March 1, 2020 (Settlement date) \ 1= CDN \ 1.368 US \1 =CDN \1 .368. *for contracts expiring on March 1, 2020 At what amount (in Canadian Dollars) would the forward contract with the bank be recorded, if recorded gross?

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Question 12

XYZ Corp. has a calendar year end. On January 1, 2019, the company borrowed $5,000,000 U.S. dollars from an American Bank. The loan is to be repaid on December 31, 2022 and requires interest at 5% to be paid every December 31. The loan and applicable interest are both to be repaid in U.S. dollars. XYZ does not hedge to minimize its foreign exchange risk. The following exchange rates were in effect throughout the term of the loan: Jaruary 1,2019 US \ 1= CDN \ 1.1500 December 31,2019 US \ 1= CDN \ 1.1490 December 31,2020 US \ 1= CDN \ 1.1485 December 31,2021 US \ 1= CDN \ 1.1483 December 31,2022 US \ 1= CDN \ 1.1487 The average rates in effect for 2019 and 2020 were as follows: 2019: US \ 1= CDN \ 1.1493 2020: US \ 1= CDN \ 1.1487 What is the amount of interest expense (in Canadian Dollars) recorded for 2019?

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Question 13

On July 1, 2020, CANCO purchased inventory from its main U.S. supplier, RNB Enterprises, at a cost of US$12,000. CANCO's year end is on July 31. Payment of US$12,000 for the inventory is due on August 31, 2020. Some important dates regarding this transaction, as well as the exchange rates in effect at each of these dates are shown below: Trarsaction date: July 1,2020: 1 U.S. Dollar = CDN 1.370 Year end July 31,2020: 1 U.S. Dollar = CDN \ 1.345 Setternent date: August 31,2020: 1 U.S. Dollar = CDN \ 1.325 What would be the amount of the foreign exchange gain or loss recorded for the year end, July 31, 2020?

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Question 14

XYZ Corp. has a calendar year end. On January 1, 2019, the company borrowed $5,000,000 U.S. dollars from an American Bank. The loan is to be repaid on December 31, 2022 and requires interest at 5% to be paid every December 31. The loan and applicable interest are both to be repaid in U.S. dollars. XYZ does not hedge to minimize its foreign exchange risk. The following exchange rates were in effect throughout the term of the loan: Jaruary 1,2019 US \ 1= CDN \ 1.1500 Decerrber 31,2019 US \ 1= CDN \ 1.1490 December 31,2020 US \ 1= CDN \ 1.1485 December 31,2021 US \ 1= CDN \ 1.1483 December 31,2022 US \ 1= CDN \ 1.1487 The average rates in effect for 2019 and 2020 were as follows: 2019: US \ 1= CDN \ 1.1493 2020: US \ 1= CDN \ 1.1487 By what amount (in Canadian Dollars) would XYZ have to adjust its Loan Liability on December 31, 2019 as a result of the year's foreign exchange rate fluctuations?

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Question 15

On July 1, 2020, CANCO purchased inventory from its main U.S. supplier, RNB Enterprises, at a cost of US$12,000. CANCO's year end is on July 31. Payment of US$12,000 for the inventory is due on August 31, 2020. Some important dates regarding this transaction, as well as the exchange rates in effect at each of these dates are shown below: Parsaction date: July 1,2020: 1 U.S. Dollar = CDN \ 1.370 Year end July 31,2020: 1 U.S. Dollar = CDN \ 1.345 Setternent date: August 31,2020: 1 U.S. Dollar = CDN \ 1.325 At what amount would CANCO record its liability to RNB at the time of the inventory purchase?

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Question 16

On July 1, 2019, North Inc., based in Alberta, ordered merchandise from an American supplier for US$600,000. Delivery was scheduled for the month of October, with payment to be made in full on November 15, 2019. Once the order was placed, North entered into a forward contract with its bank to purchase US$600,000 on the settlement date at the forward rate of CDN$1.3625. The forward contract was designated as a cash flow hedge of the cash flow required to settle with the American supplier. The merchandise was received on October 1, 2019, when the spot rate was US$1 = CDN$1.3575. On October 31, the company's year-end, the spot rate was $1.3690. North purchased the U.S. dollars to pay its supplier on November 15, 2019 when the spot rate was CDN$1.3725. The forward rate to November 15, 2019, was CDN$1.365 on October 1 and CDN$1.37 on October 31. A summary of the significant dates and exchange rates pertaining to this transaction are as follows: Spot Rates Forward Rates July 1,2019 (Order date and hedge date) \ 1=\ 1.3445 \ 1=\ 1.3625 October 1,2019 (Delivery date) \ 1=\ 1.3575 \ 1=\ 1.365 October 31,2019(Year-end) CDN \1 .369 CDN \1 .37 November 15,2019 (Settlement date) US \1 =CDN \1 .3725 US \1 =CDN \1 .3725 *for contracts expiring on November 15, 2019 What amount will be recorded as the value of the forward contract on October 31, 2019 (year-end) if the forward contract is recorded using the net method?

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Question 17

Which of the following statements is correct?

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Question 18

On July 1, 2019, North Inc., based in Alberta, ordered merchandise from an American supplier for US$600,000. Delivery was scheduled for the month of October, with payment to be made in full on November 15, 2019. Once the order was placed, North entered into a forward contract with its bank to purchase US$600,000 on the settlement date at the forward rate of CDN$1.3625. The forward contract was designated as a cash flow hedge of the cash flow required to settle with the American supplier. The merchandise was received on October 1, 2019, when the spot rate was US$1 = CDN$1.3575. On October 31, the company's year-end, the spot rate was $1.3690. North purchased the U.S. dollars to pay its supplier on November 15, 2019 when the spot rate was CDN$1.3725. The forward rate to November 15, 2019, was CDN$1.365 on October 1 and CDN$1.37 on October 31. A summary of the significant dates and exchange rates pertaining to this transaction are as follows: Spot Rates Forward Rates July 1,2019 (Order date and hedge date) \ 1=\ 1.3445 \ 1=\ 1.3625 October 1,2019 (Delivery date) \ 1=\ 1.3575 \ 1=\ 1.365 October 31,2019(Year-end) CDN \1 .369 CDN \1 .37 November 15,2019 (Settlement date) US \1 =CDN \1 .3725 US \1 =CDN \1 .3725 *for contracts expiring on November 15, 2019 What is the journal entry required to record the ordering of North's merchandise?

(Multiple Choice)

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Question 19

According to IFRS 9, which of the following statements pertaining to a forward contract is true?

(Multiple Choice)

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Question 20

Which of the following statements is correct?

According to IFRS 9, which of the following statements pertaining to a forward contract is true?

Conceptual and Case Analysis Frameworks for Financial Reporting

Investments in Equity Securities

Business Combinations

Consolidation of Non-Wholly Owned Subsidiaries

Consolidation Subsequent to Acquisition Date

Intercompany Inventory and Land Profits

A Intercompany Profits in Depreciable Assets B Intercompany Bondholdings

Consolidated Cash Flows and Changes in Ownership

Other Consolidation Reporting Issues

Translation and Consolidation of Foreign Operations

Accounting for Not-For-Profit and Public Sector Organizations

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