Explain the concept underlying the two transaction perspective to accounting for foreign currency transaction.

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Answer 1

Question

Chapter 6, Problem 1Q

To determine

Explain the concept underlying the two transaction perspective to accounting for foreign currency transaction.

Expert Solution & Answer

Explanation of Solution

Accounting:

Accounting refers to correct recording and reporting of, the financial transactions and events of an organization. Accounting profession involves, use of accounting practices that are standardized, so that users can easily understand and compare the accounting information.

The concept of accounting alternatives underlies the two transaction perspective to accounting for foreign currency transaction. EX corporation considers the sale amount in the currency value of Country U at the time when sale occurs. At this point of time, the sale has been done completely and no further adjustments are needed for sales account. The difference between the received value, at the time of sale and at the time of payment due, occurs because of extension in foreign currency credit to customers. This difference can be positive or negative and reported in income statement as Foreign Exchange Gain or Loss.

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Ridley Energy Inc. is owned by a group of private investors. The firm earned $4,200,000 after taxes this year. With 1.2 million shares outstanding, earnings per share were $3.50. The stock has recently been trading at $80 per share among current shareholders. Four dollars of this value is attributed to investor anticipation of a cash dividend. As the financial manager of Ridley Energy, you are evaluating the alternative of repurchasing some company common stock by means of a tender offer at $80 per share. How much common stock could the firm repurchase if this alternative were selected? Step by step answer

Answer 2

Question

Chapter 6, Problem 1Q

To determine

Explain the concept underlying the two transaction perspective to accounting for foreign currency transaction.

Expert Solution & Answer

Explanation of Solution

Accounting:

Accounting refers to correct recording and reporting of, the financial transactions and events of an organization. Accounting profession involves, use of accounting practices that are standardized, so that users can easily understand and compare the accounting information.

The concept of accounting alternatives underlies the two transaction perspective to accounting for foreign currency transaction. EX corporation considers the sale amount in the currency value of Country U at the time when sale occurs. At this point of time, the sale has been done completely and no further adjustments are needed for sales account. The difference between the received value, at the time of sale and at the time of payment due, occurs because of extension in foreign currency credit to customers. This difference can be positive or negative and reported in income statement as Foreign Exchange Gain or Loss.

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Answer 3

Question

Chapter 6, Problem 1Q

To determine

Explain the concept underlying the two transaction perspective to accounting for foreign currency transaction.

Expert Solution & Answer

Explanation of Solution

Accounting:

Accounting refers to correct recording and reporting of, the financial transactions and events of an organization. Accounting profession involves, use of accounting practices that are standardized, so that users can easily understand and compare the accounting information.

The concept of accounting alternatives underlies the two transaction perspective to accounting for foreign currency transaction. EX corporation considers the sale amount in the currency value of Country U at the time when sale occurs. At this point of time, the sale has been done completely and no further adjustments are needed for sales account. The difference between the received value, at the time of sale and at the time of payment due, occurs because of extension in foreign currency credit to customers. This difference can be positive or negative and reported in income statement as Foreign Exchange Gain or Loss.

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Answer 4

Question

Chapter 6, Problem 1Q

To determine

Explain the concept underlying the two transaction perspective to accounting for foreign currency transaction.

Expert Solution & Answer

Explanation of Solution

Accounting:

Accounting refers to correct recording and reporting of, the financial transactions and events of an organization. Accounting profession involves, use of accounting practices that are standardized, so that users can easily understand and compare the accounting information.

The concept of accounting alternatives underlies the two transaction perspective to accounting for foreign currency transaction. EX corporation considers the sale amount in the currency value of Country U at the time when sale occurs. At this point of time, the sale has been done completely and no further adjustments are needed for sales account. The difference between the received value, at the time of sale and at the time of payment due, occurs because of extension in foreign currency credit to customers. This difference can be positive or negative and reported in income statement as Foreign Exchange Gain or Loss.

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Answer 5

Chapter 6, Problem 1Q

To determine

Explain the concept underlying the two transaction perspective to accounting for foreign currency transaction.

Expert Solution & Answer

Explanation of Solution

Accounting:

Accounting refers to correct recording and reporting of, the financial transactions and events of an organization. Accounting profession involves, use of accounting practices that are standardized, so that users can easily understand and compare the accounting information.

The concept of accounting alternatives underlies the two transaction perspective to accounting for foreign currency transaction. EX corporation considers the sale amount in the currency value of Country U at the time when sale occurs. At this point of time, the sale has been done completely and no further adjustments are needed for sales account. The difference between the received value, at the time of sale and at the time of payment due, occurs because of extension in foreign currency credit to customers. This difference can be positive or negative and reported in income statement as Foreign Exchange Gain or Loss.

Answer 6

Chapter 6, Problem 1Q

To determine

Explain the concept underlying the two transaction perspective to accounting for foreign currency transaction.

Expert Solution & Answer

Explanation of Solution

Accounting:

Accounting refers to correct recording and reporting of, the financial transactions and events of an organization. Accounting profession involves, use of accounting practices that are standardized, so that users can easily understand and compare the accounting information.

The concept of accounting alternatives underlies the two transaction perspective to accounting for foreign currency transaction. EX corporation considers the sale amount in the currency value of Country U at the time when sale occurs. At this point of time, the sale has been done completely and no further adjustments are needed for sales account. The difference between the received value, at the time of sale and at the time of payment due, occurs because of extension in foreign currency credit to customers. This difference can be positive or negative and reported in income statement as Foreign Exchange Gain or Loss.

Answer 7

Chapter 6, Problem 1Q

To determine

Explain the concept underlying the two transaction perspective to accounting for foreign currency transaction.

Answer 8

Expert Solution & Answer

Explanation of Solution

Accounting:

Accounting refers to correct recording and reporting of, the financial transactions and events of an organization. Accounting profession involves, use of accounting practices that are standardized, so that users can easily understand and compare the accounting information.

The concept of accounting alternatives underlies the two transaction perspective to accounting for foreign currency transaction. EX corporation considers the sale amount in the currency value of Country U at the time when sale occurs. At this point of time, the sale has been done completely and no further adjustments are needed for sales account. The difference between the received value, at the time of sale and at the time of payment due, occurs because of extension in foreign currency credit to customers. This difference can be positive or negative and reported in income statement as Foreign Exchange Gain or Loss.