Fundamentals of Advanced Accounting 5th Edition by Joe Ben Hoyle,Thomas Schaefer,Timothy Doupnik

Exercise 15

Rabato Corporation acquired merchandise on account from a foreign supplier on November 1, 2013, for 60,000 LCU (local currency units). It paid the foreign currency account payable on January 15, 2014. The following exchange rates for 1 LCU are known:

a. How does the fluctuation in exchange rates affect Rabato's 2013 income statement
b. How does the fluctuation in exchange rates affect Rabato's 2014 income statement