Peerless Corporation (a U.S. company) made a sale to a foreign customer on December 15, 20X1 for 125,000 crowns. It received payment on January 15, 20X2. The following exchange rates for 1 crown apply: December 15 $ 0.61 December 31 0.65 January 15 0.60 How does the fluctuation in exchange rates affect Peerless’s 20X1 income statement?

Peerless Corporation (a U.S. company) made a sale to a foreign customer on December 15, 20X1 for 125,000 crowns. It received payment on January 15, 20X2. The following exchange rates for 1 crown apply: December 15 $ 0.61 December 31 0.65 January 15 0.60 How does the fluctuation in exchange rates affect Peerless’s 20X1 income statement?

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter25: Taxation Of International Transactions

Section: Chapter Questions

Problem 25P

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December 15	$	0.61
December 31		0.65
January 15		0.60

How does the fluctuation in exchange rates affect Peerless’s 20X1 income statement?

$5,000 loss

$5,000 gain

$6,250 loss

$6,250 gain

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