ACC 703 Chapter 10: Chapter 10 – Foreign Currency Transactions.pdf

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bluedinosaur579

30 Nov 2014

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Euro = 1. 2883 cdn. Exchange differences from amortized cost > profit/loss. Spot rate on june 1 was a = 0. 941 cdn. On june 30, the company"s year- end, the spot rate was a = 0. 949 cdn. Maritime paid on july 30 was the spot rate was a = 0. 953 cdn. Record journal entries in cdn $. 9,410 (10,000 x 0. 949: exchange loss would be reported in net income at year- end. 9,530: the exchange loss will appear on the income statement for year 2. 9,530: monetary liabilities should be remeasured to current value at each reporting date. 9. 410: sales must be recorded at historical values. Ex (2): nov. 15, year 1, regina shipped products to us, with payment due jan. 31, Exchange rate us = cdn. 125. Exchange rate us = cdn. 129. Exchange rate us = cdn. 119. 29,250 - (26,000 x 1. 129: will appear on year 1 income statement.

Related Questions

Q1. What is an upstream sale? How it is different from downstream sale?

Q2. Assume Su Co. owns 100% of Sub Co. The following intercompany transactions occurred during the year:

A) Parent loaned $200 to sub. To keep things simple, assume that there is no interest revenue or interest expense associated with this loan.

B) Parent made a sale to Sub for $300 cash. The inventory had originally cost Parent $140. Sub then sold that same inventory to an outsider for $400.

C) Parent made a sale to Sub for $400 cash. The inventory had originally cost Parent $240. Sub has not yet sold that same inventory to an outsider.

Q3.Exchange rate is the rate at which one currency will be exchanged for another. It is also regarded as the value of one countryâs currency in relation to another currency. You are required to explain the difference between indirect exchange rate and direct exchange rates.

Q4.Exchange rates change because of a number of economic factors affecting the supply of and demand for a nationâs currencyWhat type of economic factors affect currency exchange rates? Give an example of a change in an economic factor that results in a weakening of the local currency unit versus a foreign currency unit.

Q5.A U.S. Parent Company acquires â¬25,000 from its bank on January 1, 2014, for use in future purchases from German companies. The direct exchange rate is $1.20 = â¬1.The parent company prepares its financial statements on July 1,2014 and on that date the exchange rate was $1.10=â¬1.

Required: record entries for purchase of currency and adjusting entry for gain or loss on July 1, 2014.

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ACC 703 Chapter 10: Chapter 10 – Foreign Currency Transactions.pdf

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