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Business Accounting Connect Access Card for Financial Accounting: Information and Decisions

A company may deal with international suppliers or customers. The company will have to pay or receive foreign currency. The receivable or payable balance in foreign exchange results in foreign exchange gain or loss due to change in foreign exchange rates. To determine: if the company should recognize the foreign exchange gain or loss. Foreign exchange gain or loss arises due to assets or liabilities exposed to foreign exchange. Any change in the value of exposed assets or liabilities is recognized as foreign exchange gain or loss. In the given case the company has a receivable from credit sales in foreign currency. The exchange rate was $1.40 on the date of sale and it is $1.30 on the dare of receipt. Hence the company has suffered a loss due to change in foreign exchange rates. So the company should recognize the loss of $0.10 in the name of foreign exchange gain or loss.

A company may deal with international suppliers or customers. The company will have to pay or receive foreign currency. The receivable or payable balance in foreign exchange results in foreign exchange gain or loss due to change in foreign exchange rates. To determine: if the company should recognize the foreign exchange gain or loss. Foreign exchange gain or loss arises due to assets or liabilities exposed to foreign exchange. Any change in the value of exposed assets or liabilities is recognized as foreign exchange gain or loss. In the given case the company has a receivable from credit sales in foreign currency. The exchange rate was $1.40 on the date of sale and it is $1.30 on the dare of receipt. Hence the company has suffered a loss due to change in foreign exchange rates. So the company should recognize the loss of $0.10 in the name of foreign exchange gain or loss.

Solution Summary: The author explains that a company dealing with international suppliers or customers may have to pay or receive foreign currency. The receivable or payable balance results in foreign exchange gain or loss due to change in exchange rates.

Connect Access Card for Financial Accounting: Information and Decisions

Connect Access Card for Financial Accounting: Information and Decisions

8th Edition

ISBN: 9781259662966

Author: John J Wild

Publisher: McGraw-Hill Education

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Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in t…

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Connect Access Card for Financial Accounting: Information and Decisions

Ch. C - Under what two conditions should investments be...Ch. C - Prob. 2DQ Ch. C - Prob. 3DQ Ch. C - Identify the three classes of debt investments and...Ch. C - Prob. 5DQ Ch. C - Prob. 6DQ Ch. C - Prob. 7DQ Ch. C - Prob. 8DQ Ch. C - Prob. 9DQ Ch. C - Prob. 10DQ

Ch. C - Prob. 11DQ Ch. C - Prob. 12DQ Ch. C - Prob. 13DQ Ch. C - Prob. 14DQ Ch. C - Prob. 15DQ Ch. C - Prob. 16DQ Ch. C - Prob. 17DQ Ch. C - Which of the following statements a through g are...Ch. C - Prob. 2QS Ch. C - Prob. 3QS Ch. C - Prob. 4QS Ch. C - Prob. 5QS Ch. C - Prob. 6QS Ch. C - Prob. 7QS Ch. C - Prob. 8QS Ch. C - Prob. 9QS Ch. C - Prob. 10QS Ch. C - Prob. 11QS Ch. C - Prob. 12QS Ch. C - Prob. 13QS Ch. C - Prob. 14QS Ch. C - Prob. 15QS Ch. C - Prob. 16QS Ch. C - Prob. 17QS Ch. C - Prob. 1E Ch. C - Prob. 2E Ch. C - Prob. 3E Ch. C - Prob. 4E Ch. C - Prob. 5E Ch. C - Prob. 6E Ch. C - Prob. 7E Ch. C - Prob. 8E Ch. C - Prob. 9E Ch. C - Prob. 10E Ch. C - Prob. 12E Ch. C - Prob. 13E Ch. C - Prob. 14E Ch. C - Prob. 15E Ch. C - Prob. 16E Ch. C - Prob. 2PSA Ch. C - Prob. 6PSA Ch. C - Prob. 2PSB Ch. C - Prob. 3PSB Ch. C - Prob. 5PSB Ch. C - Prob. 6PSB Ch. C - Prob. CSP Ch. C - Prob. 4BTN Ch. C - Prob. 9BTN

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