November 1, 2017 December 31, 2017 January 15, 2018 $0.754 0.742 0.747
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Turbo Corporation (a U.S.-based company) acquired merchandise on account from a foreign supplier on November 1, 2017, for 100,000 markkas. It paid the foreign currency account payable on January 17, 2018. The following exchange rates for 1 markka are known:
a. How does the fluctuation in exchange rates affect Turbo’s 2017 income statement?
b. How does the fluctuation in exchange rates affect Turbo’s 2018 income statement?
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- AL Maha, an Omani Company which close its accounts on 31/12 every year, sold goods to Korean Company on 1/09/2020 amounting to 5000000 KRW on a six- month term. The exchange rates as follows: 1/09/2020 1 OMR= 2937 KRW 31/12/2020 1 OMR= 3100 KRW 1/03/2021 1 OMR= 2966 KRW Required: What is the value of cash in OMR that will receive at 1/3/2021? (ROUND) Select one: a. 1686 b. 1613 c. 1702 d. Correct answer not availableOn December 20, 2017, Butanta Company (a U.S. company headquartered in Miami, Florida) sold parts to a foreign customer at a price of 50,000 ostras. Payment is received on January 10, 2018. Currency exchange rates for 1 ostra are as follows: December 20, 2017 $1.05December 31, 2017 1.02January 10, 2018 0.98a. How does the fluctuation in exchange rates affect Butanta’s 2017 income statement?b. How does the fluctuation in exchange rates affect Butanta’s 2018 income statement?North Bank has been borrowing in the U.S. markets and lending abroad, thus incurring foreign exchange risk. In a recent transaction, it issued a one-year $2 million CD at 6 percent and funded a loan in euros at 8 percent. The spot rate for the euro was €1.45/$ at the time of the transaction (US being the home country). a. Information received immediately after the transaction closing indicated that the euro will depreciate to €1.47/$ by year-end. If the information is correct, what will be the realized spread on the loan? What should have been the bank interest rate on the loan to maintain the 2 percent spread? Assume adjustments in principal value are included in the spread. b. The bank had an opportunity to sell one-year forward marks at €1.46. What would have been the spread on the loan if the bank had hedged forward its foreign exchange exposure? c. What is interest rate parity theory and calculate that at what forward exchange rate of dollars per euro, an investor in USA would…
- Last year, the Mexican peso/U.S. dollar exchange rate was MXN13.3769/$. Today, the exchange rate is MXN16.4196/$. A U.S. firm has total assets worth MXN14,680,000 located in Mexico that did not change in value over the year. What was the change in the value of the assets in dollars on the company's U.S. balance sheet? $187,009.61 −$187,009.61 $203,360.75 $0 −$203,360.75A U.S. company sells a product to a British company with the transaction listed in British pounds. On the date of the sale, the transaction total of $14,500 is billed as £10,000, reflecting an exchange rate of 1.45 (that is, $1.45 per pound). Prepare the entry to record (1) the sale and (2) the receipt of payment in pounds when the exchange rate is 1.35.1. On November 1, 2020, an entity acquired on account goods from a foreign supplier at a cost of $3,000. The accounts payable are paid on January 30, 2021. On December 1, 2020, an entity sold on account goods to a foreign customer at a selling price of $2,500. The accounts receivable is collected on February 28, 2021. The entity is operating in Philippine economy wherein the functional currency is the Philippine Peso. The following exchange rates are provided Buying spot rate Selling spot rate November 1, 2020 P40 P42 December 1, 2020 39 40 December 31, 45 45.5 2020 January 30, 2021 45.5 46 February 28, 2021 46 46.5 What is the carrying amount of monetary asset on December 31, 2020?
- a. How much is the Foreign Currency Payable on March 1, 2017 priorto settlement? b. How much is the Net ForEx gain or (loss)?Company X is a U.S.-based IT company with operations and earnings in a number of foreign countries. The company's profits by subsidiary, in local currency (in millions), are shown in the following table for 2019 and 2020. Net Income Japanese Subsidiary Britih Subsidiary 2019 JPY 200 GBP 100.00 2020 JPY 1,480 GBP 108.40 The average exchange rate for each year, by currency pairs, is the following. Exchange Rate USD = 1 GBP JPY = 1 USD 2019 97.57 1.5646 2020 90.88 1.6473 Use the above data, Students answer the following questions. a. What is Company X's consolidated profits in U.S. dollars in 2019 and 2020? b. If the same exchange rates are used for both years, what is the change in corporate earnings on a "constant currency" basis? c. Using the results of the constant currency analysis in part b, is it possible to separate Company X's growth in earnings between local currency earnings and foreign exchange rate impacts on a consolidated basis?Brandt Corp. (a U.S.-based company) sold parts to a South Korean customer on December 1, 2020, with payment of 10 million South Korean won to be received on March 31, 2021. The following exchange rates apply: Date Spot Rate Forward Rate(to March 31, 2021) December 1, 2020 $ 0.0035 $ 0.0034 December 31, 2020 0.0033 0.0032 March 31, 2021 0.0038 N/A 1. Assuming that Brandt did not hedge his foreign exchange risk, how much foreign exchange gain or loss should it report on its 2020 income statement with regard to this transaction? a. 3000 gain b. 2000 loss c. 5000 gain d. 1000 loss 2. Assuming that Brandt entered into a forward contract to sell 10 million South Korean won on December 1, 2020, as a fair value hedge of a foreign currency receivable, what is the net impact on its net income in 2020 resulting from a fluctuation in the value of the won? Brandt amortizes forward points on a monthly basis using a straight-line method. Ignore…
- 1 . PL Co purchased goods on credit from a US supplier costing $US 225,000 on 5th June 2020 when the exchange rate was A$1 = US0.69 . On 30 June 2020, balance date , the exchange rate was A$1 = US0.72 . PL Co paid the US supplier on 7th July 2020 when the exchange rate was A$1 = 0.74. Required : Prepare the journal entries for the aboveASSUME THAT THE U.S. DOLLAR IS THE FUNCTIONAL CURRENCY. Ruthie Inc. had a debit adjustment of $7900 for the year ended December 31, 2019, from restating its foreign subsidiary's accounts from their local currency units into U.S. dollars. Additionally, Ruthie had a receivable from a foreign customer. It is denominated in the customer's local currency. On December 31, 2018, this receivable for 300,000 local currency units (LCU) was correctly included in Ruthie's balance sheet at $124200. When the receivable was collected on February 15, 2019, the U.S. dollar-equivalent was $122200. In Ruthie's 2019 consolidated statement of income, how much should be reported as foreign exchange gain/(loss) in computing net income? BE SURE TO TYPE A SIMPLE NUMBER WITH NO COMMAS OR DOLLAR SIGNS. FOR EXAMPLE, TYPE 1000 INSTEAD OF $1,000. IF THE NUMBER IS NEGATIVE, TYPE -1000 INSTEAD OF ($1,000) Your Answer:Accounting Car Corp. (a U.S.-based company) sold parts to a Japanese customer on December 1, 2020, with payment of 10 million Japanese yen to be received on January 31, 2021. The following exchange rates applied: Date Spot rate Forward rate to 01/31/21 0.00090 0.00093 0.00092 0.00098 0.00095 December 1, 2020 December 31, 2020 January 31, 2021 Assuming a forward contract was entered into, what would be the net impact on Car Corp.'s 2020 income statement related to this foreign currency transaction? Assume an annual interest rate of 12% and a fair value hedge. The present value for one month at 12% is .9901. A. $295.05 (loss). B. $ 300 (gain). C. $ 300 (loss). D. $ 700 (gain). E. $ 700 (loss). 0.00095
