Spindler, Inc. (a U.S.-based company), imports surfboards from a supplier in Brazil and sells them in the United States. Purchases are denominated in terms of the Brazilian real (BRL). During 2020, Spindler acquires 300 surfboards at a price of BRL 1,600 per surfboard, for a total of BRL 480,000.00. Spindler will pay for the surfboards when it sells them. Relevant exchange rates are as follows:   Date U.S. Dollar per Brazilian Real (BRL)   September 1, 2020 $ 0.240   December 1, 2020   0.230   December 31, 2020   0.250   March 1, 2021   0.235       Assume that Spindler acquired the surfboards on September 1, 2020, and made payment on December 1, 2020. What is the effect of the exchange rate fluctuations on reported income in 2020? Assume that Spindler acquired the surfboards on December 1, 2020, and made payment on March 1, 2021. What is the effect of the exchange rate fluctuations on reported income in 2020 and 2021? Assume that Spindler acquired the surfboards on September 1, 2020, and made payment on March 1, 2021. What is the effect of the exchange rate fluctuations on reported income in 2020 and in 2021? a. 2020 Gain b. 2020 Loss     2021 Gain c  2020 Loss     2021 Gain

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Chapter1: Financial Statements And Business Decisions
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Spindler, Inc. (a U.S.-based company), imports surfboards from a supplier in Brazil and sells them in the United States. Purchases are denominated in terms of the Brazilian real (BRL). During 2020, Spindler acquires 300 surfboards at a price of BRL 1,600 per surfboard, for a total of BRL 480,000.00. Spindler will pay for the surfboards when it sells them. Relevant exchange rates are as follows:

 

Date U.S. Dollar per
Brazilian Real (BRL)
 
September 1, 2020 $ 0.240  
December 1, 2020   0.230  
December 31, 2020   0.250  
March 1, 2021   0.235  
 

 

  1. Assume that Spindler acquired the surfboards on September 1, 2020, and made payment on December 1, 2020. What is the effect of the exchange rate fluctuations on reported income in 2020?
  2. Assume that Spindler acquired the surfboards on December 1, 2020, and made payment on March 1, 2021. What is the effect of the exchange rate fluctuations on reported income in 2020 and 2021?
  3. Assume that Spindler acquired the surfboards on September 1, 2020, and made payment on March 1, 2021. What is the effect of the exchange rate fluctuations on reported income in 2020 and in 2021?

a. 2020 Gain

b. 2020 Loss

    2021 Gain

c  2020 Loss

    2021 Gain

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