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Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik
Edition 10ISBN: 978-1260575910Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik
Edition 10ISBN: 978-1260575910 Exercise 6
Use the following information for Problems 11 and 12.
MNC Corp.(a U.S.-based company) sold parts to a South Korean customer on December 1, 2011, with payment of 10 million South Korean won to be received on March 31, 2012.The following exchange rates apply:
MNC's incremental borrowing rate is 12 percent.The present value factor for three months at an annual interest rate of 12 percent (1 percent per month) is 0.9706.
Assuming that MNC did not enter into a forward contract, how much foreign exchange gain or loss should it report on its 2011 income statement with regard to this transaction
a.$5,000 gain.
b.$3,000 gain.
c.$2,000 loss.
d.$1,000 loss.
MNC Corp.(a U.S.-based company) sold parts to a South Korean customer on December 1, 2011, with payment of 10 million South Korean won to be received on March 31, 2012.The following exchange rates apply:
MNC's incremental borrowing rate is 12 percent.The present value factor for three months at an annual interest rate of 12 percent (1 percent per month) is 0.9706.
Assuming that MNC did not enter into a forward contract, how much foreign exchange gain or loss should it report on its 2011 income statement with regard to this transaction
a.$5,000 gain.
b.$3,000 gain.
c.$2,000 loss.
d.$1,000 loss.
Explanation
Verified
Verified
Foreign currency transaction:
It refers...
Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik
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