Benjamin, Inc., operates an export/import business. The company has considerable dealings with companies in the country of

Question:

Benjamin, Inc., operates an export/import business. The company has considerable dealings with companies in the country of Camerrand. The denomination of all transactions with these companies is alaries (AL), the Camerrand currency. During 2013, Benjamin acquires 20,000 widgets at a price of 8 alaries per widget. It will pay for them when it sells them. Currency exchange rates for 1 AL are as follows:
September 1, 2013 ........................... $0.46
December 1, 2013 ............................ 0.44
December 31, 2013 ........................... 0.48
March 1, 2014 ................................. 0.45
a. Assume that Benjamin acquired the widgets on December 1, 2013, and made payment on March 1, 2014. What is the effect of the fluctuations on reported income in 2013 and in 2014?
b. Assume that Benjamin acquired the widgets on September 1, 2013, and made payment on December 1, 2013. What is the effect of the fluctuations on reported income in 2013?
c. Assume that Benjamin acquired the widgets on September 1, 2013, and made payment on March 1, 2014. What is the effect of the fluctuations on reported income in 2013 and in 2014?
Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...