Norton Co., a U.S. corporation, sold inventory on December 1, 2011, with payment of 10,000 British pounds to be received in sixty days. The pertinent exchange rates were as follows: \[\begin{array} { | l | l | l | } \hline \text { Dec 1 } & \text { Spot rate: } & \$ 1.7241 \\ \hline \text { Dec. 31 } & \text { Spot rate: } & \$ 1.8182 \\ \hline \text { Jan. 30 } & \text { Spot rate: } & \$ 1.6666 \\ \hline \end{array}\] -What amount of foreign exchange gain or loss should be recorded on January 30?

A) $1,516 gain. B) $1,516 loss. C) $575 loss. D) $500 loss. E) $500 gain. A) $1,516 gain. B) $1,516 loss. C) $575 loss. D) $500 loss. E) $500 gain.

Norton Co., a U.S. corporation, sold inventory on December 1, 2011, with payment of 10,000 British pounds to be received in sixty days. The pertinent exchange rates were as follows: \[\begin{array} { | l | l | l | } \hline \text { Dec 1 } & \text { Spot rate: } & \$ 1.7241 \\ \hline \text { Dec. 31 } & \text { Spot rate: } & \$ 1.8182 \\ \hline \text { Jan. 30 } & \text { Spot rate: } & \$ 1.6666 \\ \hline \end{array}\] -What amount of foreign exchange gain or loss should be recorded on December 31?

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.

Car Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2011, with payment of 10 million Korean won to be received on January 15, 2012. The following exchange rates applied: $\begin{array}{lrr}& & \text { Forward } \\ & \text { Sot } & \text { Rate } \\ \text { Date } & \text { Rate } & \text { to Jan.15 }\\ \text { December 16, 2011 } & \$ .00092 & \$ .00098 \\ \text { December 31,2011 } & .00090 & .00093 \\ \text { January } 15,2012 & .00095 & .00095 \end{array}$ -Assuming a forward contract was not entered into, what would be the net impact on Car Corp.'s 2011 income statement related to this transaction?

A) $500 (gain). B) $500 (loss). C) $200 (gain). D) $200 (loss). E) $- 0 - A) $500 (gain). B) $500 (loss). C) $200 (gain). D) $200 (loss). E) $- 0 -

Brisco Bricks purchases raw material from its foreign supplier, Bolivian Clay, on May 8. Payment of 2,000,000 foreign currency units (FC) is due in 30 days. May 31 is Brisco's fiscal year-end. The pertinent exchange rates were as follows: \[\begin{array} { | l | l | l | } \hline \text { May 8 } & \text { Spot rate: } & \$ 1.25 \\ \hline \text { May 31 } & \text { Spot rate: } & \$ 1.26 \\ \hline \text { Jun. 7 } & \text { Spot rate: } & \$ 1.20 \\ \hline \end{array}\] -Meisner Co. ordered parts costing §100,000 for a foreign supplier on May 12 when the spot rate was $.24 per stickle. A one-month forward contract was signed on that date to purchase §100,000 at a forward rate of $.25 per stickle. On June 12, when the parts were received and payment was made, the spot rate was $.28 per stickle. At what amount should inventory be reported?

A) $0. B) $28,000. C) $24,000. D) $25,000. E) $2,000. A) $0. B) $28,000. C) $24,000. D) $25,000. E) $2,000.

Brisco Bricks purchases raw material from its foreign supplier, Bolivian Clay, on May 8. Payment of 2,000,000 foreign currency units (FC) is due in 30 days. May 31 is Brisco's fiscal year-end. The pertinent exchange rates were as follows: \[\begin{array} { | l | l | l | } \hline \text { May 8 } & \text { Spot rate: } & \$ 1.25 \\ \hline \text { May 31 } & \text { Spot rate: } & \$ 1.26 \\ \hline \text { Jun. 7 } & \text { Spot rate: } & \$ 1.20 \\ \hline \end{array}\] -How much Foreign Exchange Gain or Loss should Brisco record on May 31?

A) $2,520,000 gain. B) $20,000 gain. C) $20,000 loss. D) $80,000 gain. E) $80,000 loss. A) $2,520,000 gain. B) $20,000 gain. C) $20,000 loss. D) $80,000 gain. E) $80,000 loss.

On April 1, 2010, Shannon Company, a U.S. company, borrowed 100,000 euros from a foreign bank by signing an interest-bearing note due April 1, 2011. The dollar value of the loan was as follows: \[\begin{array} { | l | c | } \hline { \text { Date } } & \text { Amount } \\ \hline \text { April 1,2010 } & \$ 97,000 \\ \hline \text { December } 31,2010 & \$ 103,000 \\ \hline \text { April 1, 2011 } & \$ 105,000 \\ \hline \end{array}\] -How much foreign exchange gain or loss should be included in Shannon's 2011 income statement?

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.

On April 1, 2010, Shannon Company, a U.S. company, borrowed 100,000 euros from a foreign bank by signing an interest-bearing note due April 1, 2011. The dollar value of the loan was as follows: \[\begin{array} { | l | c | } \hline { \text { Date } } & \text { Amount } \\ \hline \text { April 1,2010 } & \$ 97,000 \\ \hline \text { December } 31,2010 & \$ 103,000 \\ \hline \text { April 1, 2011 } & \$ 105,000 \\ \hline \end{array}\] -How much foreign exchange gain or loss should be included in Shannon's 2010 income statement?

A) $3,000 gain. B) $3,000 loss. C) $6,000 gain. D) $6,000 loss. E) $7,000 gain. A) $3,000 gain. B) $3,000 loss. C) $6,000 gain. D) $6,000 loss. E) $7,000 gain.

Exam 9: Foreign Currency Transactions and Hedging Foreign Exchange Risk

Norton Co., a U.S. corporation, sold inventory on December 1, 2011, with payment of 10,000 British pounds to be received in sixty days. The pertinent exchange rates were as follows: Dec 1 Spot rate: \ 1.7241 Dec. 31 Spot rate: \ 1.8182 Jan. 30 Spot rate: \ 1.6666 -What amount of foreign exchange gain or loss should be recorded on January 30?

(Multiple Choice)

4.8/5

(31)

Question 21

Brisco Bricks purchases raw material from its foreign supplier, Bolivian Clay, on May 8. Payment of 2,000,000 foreign currency units (FC) is due in 30 days. May 31 is Brisco's fiscal year-end. The pertinent exchange rates were as follows: May 8 Spot rate: \ 1.25 May 31 Spot rate: \ 1.26 Jun. 7 Spot rate: \ 1.20 -Belsen purchased inventory on December 1, 2010. Payment of 200,000 stickles was to be made in sixty days. Also on December 1, Belsen signed a contract to purchase §200,000 in sixty days. The spot rate was §1 = .35714, and the 60-day forward rate was §1 = $.38462. On December 31, the spot rate was §1 = .34483 and the 30-day forward rate was §1 = .38168. Assume an annual interest rate of 12% and a fair value hedge. The present value for one month at 12% is .9901. In the journal entry to record the establishment of a forward exchange contract, at what amount should the Forward Contract account be recorded on December 1?

(Multiple Choice)

4.8/5

(33)

Question 22

Norton Co., a U.S. corporation, sold inventory on December 1, 2011, with payment of 10,000 British pounds to be received in sixty days. The pertinent exchange rates were as follows: Dec 1 Spot rate: \ 1.7241 Dec. 31 Spot rate: \ 1.8182 Jan. 30 Spot rate: \ 1.6666 -What amount of foreign exchange gain or loss should be recorded on December 31?

(Multiple Choice)

4.8/5

(31)

Question 23

Car Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2011, with payment of 10 million Korean won to be received on January 15, 2012. The following exchange rates applied: Forward Sot Rate Date Rate to Jan.15 December 16, 2011 \ .00092 \ .00098 December 31,2011 .00090 .00093 January 15,2012 .00095 .00095 -Assuming a forward contract was not entered into, what would be the net impact on Car Corp.'s 2011 income statement related to this transaction?

(Multiple Choice)

4.9/5

(36)

Question 24

Brisco Bricks purchases raw material from its foreign supplier, Bolivian Clay, on May 8. Payment of 2,000,000 foreign currency units (FC) is due in 30 days. May 31 is Brisco's fiscal year-end. The pertinent exchange rates were as follows: May 8 Spot rate: \ 1.25 May 31 Spot rate: \ 1.26 Jun. 7 Spot rate: \ 1.20 -Meisner Co. ordered parts costing §100,000 for a foreign supplier on May 12 when the spot rate was $.24 per stickle. A one-month forward contract was signed on that date to purchase §100,000 at a forward rate of $.25 per stickle. On June 12, when the parts were received and payment was made, the spot rate was $.28 per stickle. At what amount should inventory be reported?

(Multiple Choice)

4.7/5

(43)

Question 25

Gaw Produce Co. purchased inventory from a Japanese company on December 18, 2011. Payment of 4,000,000 yen ( $\times$ ) was due on January 18, 2012. Exchange rates between the dollar and the yen were as follows: $Gaw Produce Co. purchased inventory from a Japanese company on December 18, 2011. Payment of 4,000,000 yen ( \times ) was due on January 18, 2012. Exchange rates between the dollar and the yen were as follows: Required: Prepare all journal entries for Gaw Produce Co. in connection with the purchase and payment.$ Required: Prepare all journal entries for Gaw Produce Co. in connection with the purchase and payment.

(Essay)

4.9/5

(37)

Question 26

What factors create a foreign exchange gain?

(Essay)

4.9/5

(40)

Question 27

Lawrence Company, a U.S. company, ordered parts costing 1,000,000 Thailand bahts from a foreign supplier on July 7 when the spot rate was $.025 per baht. A one-month forward contract was signed on that date to purchase 1,000,000 bahts at a rate of $.027. The forward contract is properly designated as a fair value hedge of the 1,000,000 baht firm commitment. On August 7, when the parts are received, the spot rate is $.028. What is the amount of accounts payable that will be paid at this date?

(Multiple Choice)

4.9/5

(38)

Question 28

All of the following hedges are used for future purchase/sale transactions except

(Multiple Choice)

4.8/5

(34)

Question 29

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

(Essay)

4.7/5

(36)

Question 30

A U.S. company sells merchandise to a foreign company denominated in the foreign currency. Which of the following statements is true?

(Multiple Choice)

4.8/5

(33)

Question 31

Brisco Bricks purchases raw material from its foreign supplier, Bolivian Clay, on May 8. Payment of 2,000,000 foreign currency units (FC) is due in 30 days. May 31 is Brisco's fiscal year-end. The pertinent exchange rates were as follows: May 8 Spot rate: \ 1.25 May 31 Spot rate: \ 1.26 Jun. 7 Spot rate: \ 1.20 -How much Foreign Exchange Gain or Loss should Brisco record on May 31?

(Multiple Choice)

4.9/5

(36)

Question 32

A spot rate may be defined as

(Multiple Choice)

4.8/5

(50)

Question 33

Winston Corp., a U.S. company, had the following foreign currency transactions during 2011: (1.) Purchased merchandise from a foreign supplier on July 16, 2011 for the U.S. dollar equivalent of $47,000 and paid the invoice on August 3, 2011 at the U.S. dollar equivalent of $54,000. (2.) On October 15, 2011 borrowed the U.S. dollar equivalent of $315,000 evidenced by a non-interest-bearing note payable in euros on October 15, 2011. The U.S. dollar equivalent of the note amount was $295,000 on December 31, 2011, and $299,000 on October 15, 2012. -What amount should be included as a foreign exchange gain or loss from the two transactions for 2011?

(Multiple Choice)

4.8/5

(38)

Question 34

On April 1, Quality Corporation, a U.S. company, expects to sell merchandise to a French customer in three months, denominating the transaction in euros. On April 1, the spot rate is $1.41 per euro, and Quality enters into a three-month forward contract cash flow hedge to sell 400,000 euros at a rate of $1.36. At the end of three months, the spot rate is $1.37 per euro, and Quality delivers the merchandise, collecting 400,000 euros. What are the effects on net income from these transactions?

(Multiple Choice)

4.8/5

(36)

Question 35

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

(Essay)

4.8/5

(36)

Question 36

What is the purpose of a hedge of foreign exchange risk?

(Essay)

4.8/5

(36)

Question 37

On April 1, 2010, Shannon Company, a U.S. company, borrowed 100,000 euros from a foreign bank by signing an interest-bearing note due April 1, 2011. The dollar value of the loan was as follows: Date Amount April 1,2010 \ 97,000 December 31,2010 \ 103,000 April 1, 2011 \ 105,000 -How much foreign exchange gain or loss should be included in Shannon's 2011 income statement?

(Multiple Choice)

4.8/5

(29)

Question 38

On April 1, 2010, Shannon Company, a U.S. company, borrowed 100,000 euros from a foreign bank by signing an interest-bearing note due April 1, 2011. The dollar value of the loan was as follows: Date Amount April 1,2010 \ 97,000 December 31,2010 \ 103,000 April 1, 2011 \ 105,000 -How much foreign exchange gain or loss should be included in Shannon's 2010 income statement?

(Multiple Choice)

4.8/5

(38)

Question 39

When a U.S. company purchases parts from a foreign company, which of the following will result in zero foreign exchange gain or loss?

(Multiple Choice)

4.9/5

(33)

Question 40

Showing 21 - 40 of 93

What factors create a foreign exchange gain?

All of the following hedges are used for future purchase/sale transactions except

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

A U.S. company sells merchandise to a foreign company denominated in the foreign currency. Which of the following statements is true?

A spot rate may be defined as

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

What is the purpose of a hedge of foreign exchange risk?

When a U.S. company purchases parts from a foreign company, which of the following will result in zero foreign exchange gain or loss?

The Equity Method of Accounting for Investments

Consolidation of Financial Information

Consolidations-Subsequent to the Date of Acquisition

Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements - Intra-Entity Asset Transactions

Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flo

Consolidated Financial Statements - Ownership Patterns and Income

Segment and Interim Reporting

Translation of Foreign Currency Financial Statements

Worldwide Accounting Diversity and International Standards

Financial Reporting and the Securities and Exchange Commission

Accounting for Legal Reorganizations and Liquidations

Partnerships: Formation and Operations

Partnerships: Termination and Liquidation

Accounting for State and Local Governments

Accounting for State and Local Governments

Accounting and Reporting for Private Not-For-Profit Organizations

Accounting for Estates and Trusts

Filters