Foreign Exchange Loss/Gain (Accounts Payable) Accounts Payable is a liability which a company has to pay. So, when there is reduction in the value of foreign currency in terms of dollars, the difference is considered as foreign exchange gain and when the is appreciation in the value of foreign currency in terms of dollars, the difference is considered as foreign exchange loss. 1. Prepare the journal entry to record the Internet rights purchased on January 1, 2015. 2. Prepare the journal entries to record the payments on March 31, June 30, September 30, and December 31, 2015. 3. How can the company protect itself from unanticipated gains and losses from currency translation if all of the payments are specified to be paid in yen?

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Chapter 15, Problem 7BTN

To determine

Foreign Exchange Loss/Gain (Accounts Payable)

Accounts Payable is a liability which a company has to pay. So, when there is reduction in the value of foreign currency in terms of dollars, the difference is considered as foreign exchange gain and when the is appreciation in the value of foreign currency in terms of dollars, the difference is considered as foreign exchange loss.

1. Prepare the journal entry to record the Internet rights purchased on January 1, 2015.

2. Prepare the journal entries to record the payments on March 31, June 30, September 30, and December 31, 2015.

3. How can the company protect itself from unanticipated gains and losses from currency translation if all of the payments are specified to be paid in yen?

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